TAMPA, Fla. (WFLA) — The popular peer-to-peer money transfer system, Zelle, is owned by seven major banks and is embedded into many online accounts. Transactions are instant and irreversible, which is attractive to criminals, and consumers report losing millions.

“I’m looking at my account and all of a sudden money is being transferred to somebody and I have no idea who they are,” said Scott Schaefer of Pinellas Park.

This story is playing out all over the Tampa Bay area—and across the country. Crooks either hack into consumers’ devices or get in using phishing techniques, or crooks trick consumers into unknowingly sending them money through Zelle.

Once the money is gone, it’s nearly impossible to get it back.

Two Democratic senators, Elizabeth Warren of Massachusetts and Robert Menendez of New Jersey, wrote a letter last year to Early Warning Services, Zelle’s parent company. In the letter, the senators say, “your company and the banks have a clear responsibility to more aggressively protect consumers.”

The senators demanded answers, including how banks and Zelle determine which consumers get their money back and which don’t. They also want to know what’s being done to prevent the fraud in the first place.

Recently, four major banks responded to the senators’ questions, saying that in the past 18 months, consumers reported 192,878 Zelle fraud cases, worth collectively $213 million in losses. Of those nearly 200,000 reports, banks reimbursed consumers in just 3,500 cases.

Zelle is created and owned by a consortium of major U.S. banks, including Bank of America, Chase, Capital One and Wells Fargo. It’s free, and last year people sent $490 billion through Zelle – more than twice Venmo’s $230 billion, according to the New York Times.

So how can you protect yourself?

Most Zelle fraud starts with tricks and phishing techniques, according to the FBI.

In one common scam, the crook pretends to be the bank itself. You may receive an email or text message asking you to confirm a large, fake Zelle payment. When the user replies that they didn’t authorize the transfer, the scammer follows up with a phone call pretending to be the bank. The phone number is typically spoofed so it shows up on caller ID as the bank. You’re then walked through instructions on how to reverse the unauthorized claims. What really happens, though, is that you are transferring money directly to the criminals.

Don’t give any personal information over the phone, and don’t click on text message links from people you don’t know.

Can you get your money back if you are a fraud victim?

That’s a tricky question. There have been reports around the country of some consumers receiving money back while others don’t. Several local consumers who turned to Better Call Behnken, for example, did end up getting money back, but Schaefer has not yet.

When banks say “no,” it’s typically because they say the transactions were actually approved by the account holders.

The Consumer Financial Protection Bureau clarified its position on banks’ required compliance with the Electronic Fund Transfer Act of 1978 last year. The CFPB says that “if a third party fraudulently induces a consumer into sharing account access information,” that consumer should receive the same protections as if the money were acquired from a stolen debit card or other banking “access device.”

If your bank refuses to reimburse you for a Zelle scam, you should quickly report it to local law enforcement and file a complaint with the CFPB.

You can view the recent report to Congress at these links:

  1. Report: How consumers defrauded on Zelle are left high and dry
  2. New Report by Senator Warren: Zelle Facilitating Fraud, Based on Internal Data from Big Banks