Facts About Zelle® and the State of Fraud and Scams

The Big Picture: What’s really going on with scams and criminals?

A very small percentage of the FTC’s fraud and scam reports involve payment apps or services.

Fraud and scams are not new problems. Long before payment apps came along, criminals have been stealing money and information. The problem lies with criminals; and the focus needs to be on stopping and holding them accountable. The reality is only 2.5% of the FTC’s fraud and scam reports in 2023 involved payment apps or services. In fact, new technologies like P2P apps help advance financial services and deliver layers of protection that detect criminal activity to help keep bad actors out of the financial system.

Early Warning®, the parent company of Zelle®, partners with government, public and private organizations to fight fraud and scams and protect consumers.

Whether it’s checks, credit cards, debit cards, cash, crypto, wire transfers, gift cards or P2P, staying ahead of criminals is no easy task. It’s a shared responsibility. In addition to our consumer protection efforts through technology and consumer education, we are pursuing collaborations with policy makers, consumer advocate groups, and law enforcement agencies to address the threat of fraud and scams that impact consumers in the U.S. 

As we work together to ensure law enforcement is equipped to address these crimes, we are also committed to the establishment of coordinated national education initiatives to address abuse of digital communications to commit fraud and scams. While there isn’t one solution that can single handedly eliminate financial fraud and scams, a FINRA study of individuals who had been targeted by scammers indicates that education has significant impact on making people less vulnerable to scams.

No one is immune to scams, but consumers can help protect themselves.

From deepfakes to clever social media techniques, scammers leverage the most current technology and sophisticated strategies to perpetrate their crimes. It’s more important than ever to stay vigilant and educated when sending and receiving money. This includes taking extra caution with incoming calls, texts, or direct messages from someone you don’t know, or from someone you do know in an unexpected context. And people of all ages need to beware: FTC data from 2023 shows that fraud and scams impact consumers across generations similarly. 

Prevention: What is Zelle® doing to help consumers protect themselves?

Zelle® is built on a strong foundation.

Early Warning® has been empowering and protecting consumers, small businesses, and the U.S. financial system with cutting-edge fraud and payment solutions for more than three decades. The industry, inclusive of Early Warning and Zelle®, plays a crucial role in maintaining the strength and trust in our financial system. Our peer-to-peer payment service does not just work with big banks, it provides essential support to over 2,100 banks and credit unions of all sizes, ensuring these institutions can offer great services to their local communities and customers across the country. This has allowed us to create a strong foundation with highly effective security and safety protocols across a broad range of financial institutions.

Early Warning and the Zelle® network encourage consumers to recognize scams before they happen.

Early Warning builds every product with security in mind and we are continually working to evolve our processes and controls to address the dynamic nature of fraud.

The Zelle® user experience is designed to help consumers spot scams before they happen. In-app prompts and alerts are provided to validate the recipient name to the sender during payment initiation, along with a reminder to only send money to those who are known and trusted as payments cannot be canceled once sent. The sender must acknowledge this alert before they are able to proceed with the payment. Additional messages are often sent by financial institutions to warn of common scams.

Zelle® is helping consumers stay ahead of the crime curve.

Educating consumers on how to identify and avoid fraud and scams is a top priority for Zelle®. In addition to our technology-driven lines of defense and the extensive consumer education campaigns that have reached 40 million Americans, we have also partnered with the Better Business Bureau on an educational campaign: BBB and Zelle^® warn of the red flags of scams. We are committed to consumer education through a variety of other partnerships as well, including ones with the National Council on Aging (NCOA), and Utilities United Against Scams. We’ve also launched two campaigns with Vox Media, The Science Behind Scams and S.A.F.E. Squad to help consumers identify and avoid potential scams.

Zelle® has unique reimbursement benefits for consumers that go beyond legal and regulatory requirements.

Zelle® network rules require that unauthorized fraudulent payments – those where it has been determined that a bad actor initiated a Zelle® transaction from a consumer’s account without authorization – be fully reimbursed, which exceeds the requirements of Federal Regulation E.

As of June 30, 2023, the network operating rules were expanded to require that all participating financial institutions reimburse consumers for certain qualifying imposter scams (unlike unauthorized fraudulent payments, scams involve payments authorized by the consumer). This consumer benefit for reimbursement is unique to Zelle® and also goes beyond legal and regulatory requirements.

Paying safely: How is Zelle® helping to keep money moving?

Zelle® is safe when sending money to people who are known and trusted.

Early Warning, the network operator of Zelle®, and the over 2,200 banks and credit unions of all sizes that participate on the Zelle Network prioritize providing a safe and reliable service to consumers. In 2023, transaction volume on the Zelle® network increased by 28% year-over-year as compared to 2022. Reports of fraud and scams decreased by 50%. In 2023, 99.95% of Zelle® payments were completed without a report of fraud or scam.

Use of Risk Insights for Zelle® – a predictive data service that provides FIs the ability to conduct real-time assessment to help mitigate the risk of fraud and scams – is a requirement for all financial institutions that participate in the Zelle® network.

Fast payments are more than a convenient way to pay – for many, they help improve financial health.

Every day Zelle® helps individuals and small business owners send and receive money in minutes so they can accept payments and/or tips for their work, collect reimbursement for a shared cost, send a friend or family member a gift, or pay a small business quickly. For small business owners, Zelle® improves cash flow as funds are typically more readily available than when paid manually via check. Inhibiting faster payments won’t eliminate scams - but it would make the financial lives of the millions of Americans using Zelle® more difficult.