Zelle class action alleges company erroneously advertises as safe, secure

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Zelle consumer class action overview:

• Who: A Zelle customer filed a class action lawsuit against the company.
• Why: The plaintiff claims the company does not do enough to protect customers from fraudulent activity on Zelle’s digital peer-to-peer payment platform
• Where: The lawsuit was filed in California federal court.

Zelle is the latest company to be hit with a consumer class action lawsuit amid a string of lawsuits alleging company owners do not declare or mitigate the security risks of using the payment transfer service owned by seven of the largest banks in the United States.

Plaintiff Dele Hope filed the lawsuit July 7 against Early Warning Services LLC, also known as Zelle, in a California federal court, alleging violations of consumer laws.

According to Hope, Zelle encourages bank account holders to sign up for the service by marketing itself as a fast, safe and secure way for consumers to send money. 

However, this is false, he says.

“In fact, there are huge, undisclosed security risks of using the service, including from fraudsters who regularly exploit the service,” Hope alleges.

“Zelle’s marketing representations never inform users that consumers — not Zelle or the banks through whom money is transferred — bear the full risk of these grave security and fraud threats,” the class action states.

Zelle class action alleges money not reimbursed after fraud

The class action states Zelle is fully aware there is a major fraud problem on its platform and that the banks that own it almost never reimburse victims of Zelle fraud for their losses.

In Hope’s case, he was defrauded by a scammer out of $395 in 2020. Hope used Zelle to transfer the scammer the money. When he realized he had fallen victim to fraud, he immediately informed his bank, but his bank refused to reimburse him for the losses.

As a result, Hope is seeking damages, restitution and an injunction to prevent Zelle and member banks from continuing to engage in its allegedly illegal practices. 

He looks to represent anyone who signed up for Zelle and incurred unreimbursed losses due to fraud plus a California subclass.

He seeks certification of the class action, damages, fees, costs and a jury trial.

This is the latest in a string of class action lawsuits recently filed against financial institutions, including TD Bank, that are accused of not protecting account holders who were financially injured after being defrauded while using the digital peer-to-peer payment platform Zelle.

Last month, a Seattle resident who filed a class action lawsuit alleging Wells Fargo and Zelle failed to protect customers from scammers who use Zelle’s mobile payment app dropped his claims.

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

The plaintiff is represented by Edelsberg Law PA and Kalielgold PLLC.

The Zelle class action lawsuit is Dele Hope v. Early Warning Services LLC, Case No. 2:22-cv-04639, in the U.S. District Court for the Central District of California.

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• Wells Fargo class action over Zelle fraud dropped
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