Zelle is an electronic person-to-person payment service offered by many U.S. banks as an alternative to nonbank P2P services, like PayPal or Venmo. Zelle is convenient if you have a bank checking or savings account.
Those benefits, combined with Zelle’s near-instant and irreversible transactions, make the service popular not only with consumers, but also scammers, who’ve used Zelle to steal millions of dollars from consumers’ bank accounts. According to a lawsuit filed by the Consumer Financial Protection Bureau in December 2024, users have lost $870 million dollars to fraudsters over the service’s seven-year life.
In March 2025 The CFPB, at the direction of the Trump administration, dismissed its suit against Zelle’s parent company Early Warning Services, along with JPMorgan Chase, Bank of America and Wells Fargo, the three largest banks in the country and three of EWS’s co-owners. The CFPB dismissed the suit “with prejudice,” which means the agency can’t bring it again in the future.
With less federal oversight, individuals have to be even more careful. Find out how to protect yourself from Zelle scams and what to do if you lose money.
How Does Zelle Work?
Zelle is easy to use. To send funds, all you need to do is log in to your bank’s online banking service or mobile app, access the integrated Zelle features, and then enter the amount you want to transfer and the recipient’s U.S. phone number or email address.
Recipients who are enrolled in Zelle typically receive the funds within minutes. Recipients who aren’t enrolled receive a notification that explains how to collect the funds. Zelle makes it easy to transfer money from one bank to another. More than 2,200 banks have incorporated Zelle into their online or app-based services.
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How Do Scammers Use Zelle?
A typical Zelle scam starts with an unexpected call, email or text message that appears to be from your bank or utility company.
The bank message says your bank is trying to confirm that you made a Zelle transaction for a specified amount. The utility company message states that your utility hasn’t received your payment and will turn off your power within a short time unless you immediately send a payment via Zelle.
Phone number “spoofing” may make these fraudulent calls appear to be legitimate on your phone’s caller ID.
When you contact the phone number provided to dispute the transaction, your call will seem to be connected to your bank or utility company. You’ll then be told to make a Zelle transfer, supposedly “to return the funds to your account.” This transaction — authorized by you — will in fact transfer your funds to the scammer. If your bank requires an authorization code to complete a transaction, the scammer will ask you for that code.
Zelle may also be used in other types of scams, such as fake romances, cryptocurrency cons, suspiciously cheap concert tickets or even supposed sales of purebred puppies.
In its lawsuit, the CFPB said the way Zelle was designed made it especially vulnerable to scammers. Here’s how:
— It was easy to register for Zelle and receive a Zelle token. All fraudsters needed was a deposit account and a U.S.-based phone number or email address.
— It was easy for fraudsters to “take over” a consumer’s token by obtaining a one-time passcode and then reassigning that token to a different deposit account.
— It was difficult for people sending money to figure out recipients’ true identities. Fraudsters frequently registered using misleading emails, often with Chase, Bank of America or Wells Fargo in the email address.
— At the point of transfer, partner banks only needed to display the intended recipient’s first name.
— Zelle allowed transfers of unregistered tokens.
— A user could register up to five tokens to a single deposit account. If a consumer filed a fraud claim against one token, the fraudster could switch to a different one.
— Zelle allowed users to switch the registration of a single token between different banks. This meant fraudsters could evade detection.
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How Do You Protect Yourself From Zelle Scammers?
The most effective way to protect yourself from Zelle scams is to never use the service to send money to people you don’t know.
“Consumers can and should continue to use Zelle, but be careful that they are sending the money to the right person,” says Erik M. Baskin, founder and financial planner at Baskin Financial Planning in Cheyenne, Wyoming.
If someone contacts you and asks you to send funds to them with Zelle right away, don’t respond. Instead, call your bank on what you know to be a legitimate phone number and ask a bank representative to review recent activity on your account.
Be suspicious of requests from people you don’t know, especially if the situation is presented as “urgent” with a short deadline and frightening consequences. Never share your two-factor authentication passcode with anyone.
Alex Rezzo, founder and financial planner at Andante Financial, an investment advisory firm in Los Angeles, advises his clients to use the recipient’s email address instead of a phone number when they send funds with Zelle.
“Typos are easier to spot within an email address than within digits in a phone number,” Rezzo says.
Another tip is to transfer $1 and confirm verbally that your intended recipient received the payment before you send a large amount. This practice, Rezzo says, “is a good backstop against opportunities for error.”
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What Do You Do If You’ve Been Zelle Scammed?
If you’ve been scammed with Zelle, you should contact your bank and report the loss of funds as soon as possible. In 2023, Zelle announced additional safety measures for risky transactions and a reimbursement benefit for victims of certain scams.
Institutions started to provide refunds to victims of Zelle scams in November 2023. Some banks have refused to offer refunds because the federal law protecting consumers from the theft of their funds applies only to “unauthorized” transactions.
Banks define unauthorized transactions, where a third party obtains a user’s access credentials and then transfers funds without the user knowing, as fraud. Authorized transactions, where a user is tricked into transferring money to the third party, are defined as scams.
During the Biden administration, The CFPB issued guidance to clarify that fraudulent P2P transactions are considered unauthorized because they were initiated by someone other than the consumer and the consumer received no benefit. The CFPB also stated that banks cannot consider consumer negligence as a factor or claim that consumers waived their protections in their bank account agreement.
If you’ve been scammed with Zelle and your bank refuses to return your funds, you can file a complaint with the CFPB, which forwards consumers’ complaints to financial institutions to respond.
The CFPB has collected hundreds of thousands of reports of users getting scammed.
Zelle also recommends that you report the user who you believe scammed you to the FBI Internet Crime Complaint Center.
How to Get Money Back From Zelle If You Are Scammed
If you’ve been the victim of a Zelle scam where you authorized the transfer, the unfortunate truth is you are highly unlikely to recoup your money. Zelle and its partner banks take the position that since you authorized the transaction, even though you were tricked into doing it, they are not responsible for making you whole.
Since Zelle launched in 2017, the CFPB reported that customers lost $870 million to fraudsters.
In July 2024, the United States Senate Permanent Subcommittee on Investigations reported that the percentage of fraud disputes reimbursed at the three largest banks offering Zelle decreased from 62% in 2019 to 38% in 2023. The report recommended Zelle offer more transparency in the dispute process and expand purchase protection for P2P payments.
Robert Persichitte, a certified financial planner at Delagify Financial, a financial firm specializing in helping people avoid and recover from mistakes, rip-offs and taxes, recommends victims go after the scammers directly to get their money back.
“Usually working with law enforcement is going to be the first step that you should take,” Persichitte says. “File a police report with your local police department. They may have a team for this type of thing specifically.”
Persichitte cautions that many Zelle scammers are operating outside the country, making it nearly impossible to track them down.
Gabriel Shahin, president of Falcon Wealth Planning, a fee-only advisory firm, recommends you contact your bank as soon as possible.
In some cases, if the scammer has their Zelle account connected to the same bank as you do, the bank can freeze the transaction from going through if caught in time, Shahin says.
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Protect Your Money From Zelle Scams originally appeared on usnews.com
Update 12/18/25: This story was previously published at an earlier date and has been updated with new information.