Bank Customers Are Warned That the Zelle Payment App Could Help Schemers Steal Money

A few months ago, Early Warning Services, LLC., the owner of a payment service called Zelle, told NBC that there is 'potential for fraud' in all digital payment technologies. The people who made that statement should know all about this because the service they operate has been and continues to be abused by cybercriminals. Before we see how, however, we need to take a look at what Zelle is and how people use it.

Zelle is a person-to-person payment system. Basically, you have an account that is associated with either your email address or your phone number. Your Zelle account is connected to your bank account, and whenever you want to send someone some money, you simply enter their phone number or email and click "Send". The recipient can then withdraw the cash back to their account or forward it to another person.

Zelle's main appeal stems from the fact that it's integrated with a number of banks in the US and is extremely easy to set up. Usually, creating a Zelle account involves logging into your online banking, clicking a few buttons, and confirming that you have access to your phone number or email address. This very convenience is what the scammers are abusing at the moment.

Fraudsters spoof banks' phone numbers and use social engineering to steal money from innocent people

The Zelle payment service is at the heart of the scam, but interestingly enough, you don't need to use it (or even know about it) in order to be a victim. The whole thing starts with a phone call from what appears to be your bank. The fact that you recognize the phone number is crucial for the next part of the operation.

You are told that your bank's fraud department is getting in touch to let you know that there's some suspicious activity around your account. The person talking to you is ready to secure your account, but they first need to confirm your identity. This means that you need to hand over some personal information over the phone, and in some cases, this includes the password for your online banking system. After that, the phony customer service agent asks you for a code which you have just received as an SMS. After you give it to them, they tell you that your account is now secured, that you will be issued a new credit card, and that you have nothing to worry about.

Shortly after you hang up, however, you start receiving some strange notifications. Your bank tells you that your username, password, and banking card PIN have been changed. Then, you are made aware that a new Zelle account has been created to your name and that it's sending money to random people. Convinced that something's not right, you call your bank to ask what's going on, and after you speak to a real customer service representative, you learn that the first phone call was a scam.

Because Zelle payments go through more or less instantaneously and because criminals can set up Zelle accounts using disposable phone numbers, the scam works pretty well. It's certainly not the simplest scheme in the world, and it appears to be the brainchild of experienced criminals. In fact, the significant amount of research required for the scam to work might ease some of you into a false sense of security.

Joe and Joanne Average are the main targets

You might think that a sophisticated scam like this will be aimed only at wealthy people who have significant sums in their bank accounts. This, however, doesn't seem to be the case. In June, NBC talked about several victims of this scheme. The victims came from all walks of life, and the damage in the different cases ranged from just $190 all the way to $6,400. Earlier this week, KZTV reported on a more recent instance which saw a university worker from Ohio lose $1,000 to the scam.

The scammers are after regular people, and it's clear that even well-educated and tech-savvy individuals are falling for their tricks, which means that you should be extremely careful. Don't blindly trust people on the other end of a phone line, even if you recognize their phone number. If you don't plan on using Zelle any time soon, check with your bank to see what you can do to disable it. Last, but not least, always bear in mind that your bank (or any other service provider for that matter) should never ask you for your personal information over the phone.