INFORMATION FOR ZELLE VICTIMS
P2P App Zelle Tries to Limit Scam Victim’s Protection: Schlanger Law Group Fights Back
- ·Federal law requires financial institutions, mobile banking apps, and P2P app companies to reimburse consumers who lose money in unauthorized transactions.
- Peer-to-Peer payment apps like Zelle are trying to avoid their responsibilities under the Electronic Fund Transfer Act (EFTA) by refusing to reimburse money stolen by scammers.
- Nationwide consumer protection firm Schlanger Law Group protects victims of unauthorized electronic transfers when banks and mobile apps won’t.
New York City, NY: A new financial scam involving the Zelle peer-to-peer payment app is on the rise. The Zelle scam involves a thief who sends text messages to Zelle users claiming there’s been a fraudulent transfer in their account. When the Zelle user responds, they receive a phone call from the thief pretending to be a Zelle employee who explains how the consumer can resolve the problem. By following the thief’s instructions, the consumer allows access to their bank account and the thief steals the money in the account.
Is There a Difference Between Being Defrauded and Scammed?
P2P app companies and financial institutions are bound by federal law to investigate disputed fund transfers and refund unauthorized transactions. However, Zelle is trying to limit its responsibility by distinguishing between scam scenarios and fraudulent situations. Based upon extensive experience representing consumers in these situations, Schlanger Law Group disagrees with Zelle’s position.
On its website, Zelle defines “fraud” as someone gaining access to your account and making a payment without authority. However, Zelle then defines “a scam” as a situation where an account holder was involved in the transaction and sends money to a scammer even if they were tricked into sending the payment. According to Zelle, in the first instance, the consumer should be reimbursed for the money stolen. In the second case, the consumer may not receive reimbursement.
From Zelle’s website: “Even if you were tricked or persuaded into authorizing a payment for a good or service someone said they were going to provide, but they didn’t fulfill it… Because you authorized the payment, you may not be able to get your money back.” This statement is contrary to the Electronic Fund Transfer Act which protects consumers who are tricked into permitting account access.
The examples provided on Zelle’s website include consumers buying concert tickets or puppies online from a scammer who never delivers the tickets or puppy. However, that is not the situation in the Zelle scam described above. The scammer in the Zelle ploy pretends to be a Zelle employee who needs access to the consumer’s account to help them avoid a fraudulent transfer. If the consumer grants access, it’s only because they have been deceived by the scammer. As a result, any transfers that occur after the consumer follows the scammer’s instructions should not qualify as “authorized” even according to Zelle’s own website.
The EFTA is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). This US government agency has made it clear that when scammers access accounts by fraud or robbery, the resulting transactions fall into the “unauthorized” category. The CFPA confirmed that the EFTA protects consumers who have been swindled and the Act requires investigation and reimbursement according to its terms.
From a judicial perspective, the US District Court in Green v. Capital One, 20 Civ. 4655 (ER) (S.D.N.Y. Aug. 26, 2021) ruled that Mr. Green’s situation involved an “unauthorized transfer” because it was initiated by a person who gained access to his account through fraudulent means. As a result, the court ruled the EFTA applies and Capital One was obligated to comply with the Act.
The Electronic Fund Transfer Act Doesn’t Distinguish Between Fraud and Scams
Consumer protection attorney Daniel Schlanger has extensive EFTA experience and regularly litigates against financial institutions and payment service providers that don’t follow the law. Attorney Schlanger explains, “Under the Electronic Fund Transfer Act it doesn’t matter if a consumer is a victim of ‘fraud’ or ‘a scam’ when their account is emptied. The question is whether the transfer was authorized or unauthorized. When a consumer is tricked or manipulated into allowing access to their account, all related transfers are considered unauthorized. “
Consumers who fall for the recent Zelle scam are manipulated into giving the scammer access to their accounts. Based on Zelle’s website, those consumers may think they have no recourse. When consumers are deceived and financial institutions and payment service providers like a P2P app refuse to follow the law, Schlanger Law Group helps protect consumers’ rights.
Victims of the Zelle Scam Turn to Schlanger Law Group to Help Protect Their Rights
Schlanger Law Group has been helping consumers fight back since 2007. Its mission is to protect the rights of consumers and identity theft victims by enforcing consumer protection laws throughout the country. With offices in New Jersey and New York, the dedicated team at Schlanger Law Group handles many cases on a contingency basis.
The firm is a leader in the field of consumer protection and is proud to represent victims of identity theft, unauthorized charges, and inaccurate credit reporting in New York, New Jersey, and nationwide. Contact the firm at (212) 500-6114 or through its contact form