Zelle fraud on rise, according to Massachusetts senator

Sen. Elizabeth Warren's office released the report on Monday

A report from Democratic Massachusetts Sen. Elizabeth Warren's office alleged fraud and scam incidents are increasing on the payment service Zelle.

The report, released Monday, cites data from four banks that tallied 192,878 cases worth collectively $213.8 million in 2021 and the first half of 2022 in which a customer claimed they had been fraudulently tricked into making a payment. In only roughly 3,500 cases did those banks reimburse the customer, the report found.


Further, in the cases in which it's clear funds had been taken out of customers' account without authorization, only 47% of those dollars were ever reimbursed.

Zelle illustration

SPAIN - 2021/05/19: In this photo illustration a Zelle logo seen displayed on a smartphone with the Zelle logo in the background. (Photo Illustration by Thiago Prudencio/SOPA Images/LightRocket via Getty Images) (Photo Illustration by Thiago Prudencio/SOPA Images/LightRocket via Getty Images / Getty Images)

The data for individual banks shows an increase in fraud and scams, according to the report. PNC Bank had 8,848 cases on Zelle in 2020, and is on pace to have roughly 12,300 cases this year. US Bank had 14,886 cases in 2020 and had 27,702 cases in 2021. Truist had 9,455 cases of fraud and scams on Zelle in 2020, which ballooned to 22,045 last year.


Early Warning Services (EWS), the fintech company owned by seven major U.S. banks that runs Zelle, provided the following statement to FOX Business.

"Tens of millions of consumers use Zelle without incident, with more than 99.9% of payments completed without any report of fraud or scam. Zelle usage has grown significantly since its launch, from 247 million transactions in 2017 to 1.8 billion in 2021, while the proportion of fraud and scams has steadily decreased."

"We need stronger consumer protections and to hold these banks accountable," Warren argued in a Monday tweet about fraud on Zelle.

Zelle, launched in 2017, has been used for over five billion transactions worth a total of almost $1.5 trillion in five years, including $155 billion worth of payments in the second quarter of this year, according to a September press release from the payment service. Payment volume went up by 27% year-over-year, the release said.

Customers at over 1,700 banks and credit unions currently have the option of using Zelle.

The report from Warren's office comes after the Massachusetts senator raised the issue of fraud on the payment service during a September hearing held by the Senate Committee on Banking, Housing, and Urban Affairs. 

(Photo by Mandel Ngan-Pool/Getty Images)

Senator Elizabeth Warren, D-MA, speaks during a Senate Finance Committee on the nomination of Chris Magnus to be the next US Customs and Border Protection commissioner in the Dirksen Senate Office Building on Capitol Hill Oct. 19, 2021 in Washington, (Mandel Ngan-Pool/Getty Images / Getty Images)

At the hearing, she pressed the heads of some of the U.S.'s largest banks on the number of customers that had reported fraud incidents occurring on Zelle. Warren also tried to get the bank CEOs to commit their banks to reimburse in all instances where customers make complaints about being defrauded on Zelle.


Banks are required under the Electronic Fund Transfer Act to repay customers when funds are illegally taken out of their accounts without authorization. Banks have argued that in cases of fraud — meaning a customer's account becomes compromised somehow and they send an unauthorized payment — they do reimburse customers. Banks are more reluctant to reimburse customers who claim to be scammed, arguing that customers would make such claims more often and it would be hard to tell whether the customer is telling the truth.

The Associated Press contributed to this report.