Zelle fraud cases mount as consumers file class action lawsuits

Zelle fraud class action lawsuits overview: 

• Who: Bank customers recently filed class action lawsuits against Capital One, Bank of America, Wells Fargo, Navy Federal Credit Union and Zelle. 
• Why: Customers claim the financial institutions do not do enough to protect them from fraudulent activity on Zelle’s digital peer-to-peer payment platform. 
• Where: The class action lawsuits have been filed in U.S. federal courts. 

Consumers filed a number of class action lawsuits recently against financial institutions accused of not protecting account holders who were financially injured after being defrauded while using the digital peer-to-peer payment platform Zelle. 

An influx of scams targeting Zelle users prompted a pair of U.S. senators to write a letter in April to the owner of Zelle, warning it about the amount of fraud perpetrated on the platform.

Sens. Elizabeth Warren, D-Mass., and Robert Menendez, D-N.J., accused Zelle owner Early Warning Services LLC of not doing enough to prevent fraud from occurring on the platform.

The Democratic senators also placed blame on Zelle’s owner banks, including Capital One, JP Morgan Chase, Bank of America, Wells Fargo and Truist. 

“We seek to understand the extent to which Zelle allows fraud to flourish and the steps your company is taking to increase consumer protection and help users recover lost funds,” the senators wrote.

Consumers, meanwhile, have since begun going after financial institutions, claiming they are not doing enough to protect them from falling victim of Zelle fraud. 

Capital One class action accuses bank of refusal to reimburse Zelle fraud victims

Earlier this month, a Capital One customer who claims he was the victim of a Zelle scam filed a class action lawsuit against the bank, arguing it declines to reimburse account holders who are scammed or exposed to fraud on Zelle. 

“Despite the plaintiff’s timely alerting Capital One of the fraud, Capital One refused to reimburse him for the losses,” the class action lawsuit states. 

The consumer behind the class action lawsuit claims Capital One told him it would be unable to put a stop payment on a money transfer made through Zelle that ended up falling into the hands of a scammer. 

Wells Fargo class action alleges company fails to protect customers from fraud

Also this month, a consumer filed a class action lawsuit against Wells Fargo and Zelle over claims the companies fail to protect them from scammers who target Zelle mobile payment app users.

The consumer behind the class action lawsuit claims he was scammed out of $7,500, with Wells Fargo eventually reimbursing them for $3,500, after a scammer pretending to be with the bank convinced them to send funds. 

In addition to allegedly initially declining to reimburse him, the consumer argues Wells Fargo and Zelle aren’t willing to put more protections in place that would help prevent their customers from becoming fraud victims. 

“The immediacy of Zelle’s service has made it a favorite primarily among consumers, but that has made it a favorite among criminals, who can access bank accounts directly,” the class action lawsuit states. “Once scammers can scare or trick their victims into sending money via Zelle, they can siphon away thousands of dollars in seconds.”

Bank Of America class action claims financial institution fails to disclose risks of Zelle

A consumer also hit Bank of America with a class action lawsuit this month that alleges the financial institution fails to disclose to its account holders the risks of using Zelle for money transfers. 

Further, the consumer behind the class action lawsuit argues Bank of America declines to reimburse customers who are victims of fraud through Zelle and that there is “virtually no recourse for consumers to recoup losses due to fraud.” 

Navy Federal class action accuses credit union of failing to keep reimbursement promise

Navy Federal Credit Union, meanwhile, faces claims that it fails to keep its promise that it will reimburse account holders who lose money from fraudulent activity on Zelle. 

Further, the Navy Federal class action accuses the credit union of misrepresenting to its customers the safety of using Zelle for money transfers.

“(Navy Federal) misrepresents and omits a key fact about the service that is unknown to accountholders: that there is virtually no recourse for consumers to recoup losses due to fraud,” the class action states.

The consumer behind the complaint claims Navy Federal has a “secret policy” of not reimbursing account holders who suffer financial losses due to fraudulent activity on Zelle, regardless of whether or not it is reported right away. 

Has your bank refused to reimburse you after you suffered financial losses due to fraud on Zelle? Let us know in the comments! 

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