Lawsuit claims Bank of America failed to warn customers they might get scammed using Zelle

OAKLAND, Calif. -- 7 On Your Side has reported about the many scams that drain their victims' bank accounts using Zelle, the popular quick-payment app owned by major banks. Fraudsters use a variety of schemes to trick victims into sending them money. The transfers are so fast, that they can't be traced or reversed.

Now, a class-action lawsuit claims Bank of America has failed to warn customers about the risks of sending money through Zelle.

Zelle is the most widely-used peer-to-peer payment app in the country. Hundreds of banks automatically add Zelle to their online and mobile banking apps. It's simple to use and money is gone fast. Which makes it the perfect tool for scammers.

7 On Your Side has interviewed many Bank of America customers who were tricked into sending money to bank imposters using Zelle. All were shocked to find out that Bank of America offers no fraud protections for Zelle transactions.

RELATED: California woman loses over $18K through 'Zelle' after scammers text, call her pretending to be bank

Now, Bank of America is defending a federal class-action lawsuit claiming it encourages customers to use Zelle without warning about the "huge security risks" of linking Zelle to a bank account.

The suit, filed in federal court in Oakland, says Zelle is now the nation's most popular peer-to-peer payment app with $490 billion in money transfers last year alone.

And yet it has "a massive fraud problem."

The suit says Bank of America is aware of the risks to customers, but still "touts Zelle as a secure, free and convenient way to make money transfers."

SEE ALSO: Scams targeting Zelle app users rising as criminals get more creative; how to avoid losing thousands

Once money is sent, it says, "there is virtually no recourse for consumers to recoup losses" due to fraud.

A Bank of America spokesman said only: "We disagree with the allegations and will seek to have the case dismissed."

The plaintiff is a San Jose man who fell for a phony job scam. He sent $2,500 to the fraudsters via Zelle, and another $2,400 using Venmo. Bank of America denied his claim for reimbursement.

BofA has often pointed to the customer service agreement which says: "Neither the bank nor Zelle offer a protection program for authorized payments."

RELATED: In latest Zelle scam, Wells Fargo customers lose thousands after fraudsters pose as bank employees

But the suit says that warning is missing from marketing materials.

BofA initially denied claims of those who were defrauded by those bank imposters over the past two years.

However, after 7 On Your Side pointed out they were tricked into sending the money, B of A reversed itself and reimbursed each of the customers we brought to their attention.

The class action names only Bank of America as a defendant - not Zelle or Venmo. It asks for relief for B of A customers who were defrauded through Zelle or other payment apps, without being refunded. Bank of America has yet to file a response in court.

7OYS's consumer hotline is a free consumer mediation service for those in the San Francisco Bay Area. We assist individuals with consumer-related issues; we cannot assist on cases between businesses, or cases involving family law, criminal matters, landlord/tenant disputes, labor issues, or medical issues. Please review our FAQ here. As a part of our process in assisting you, it is necessary that we contact the company / agency you are writing about. If you do not wish us to contact them, please let us know right away, as it will affect our ability to work on your case. Due to the high volume of emails we receive, please allow 3-5 business days for a response.