Law Firm Probes Zelle’s Unauthorized Fraud Reimbursement Position


A San Francisco law firm says it is investigating the fraud reimbursement practices of a number of major American banks that use the Zelle peer-to-peer payment system.

The announcement Wednesday (July 6) by Schubert Jonckheer & Kolbe LLP comes eight days after a class action suit against Zelle and Wells Fargo was withdrawn in federal court.

Zelle is run by FinTech Early Warning Services, LLC, which is owned by seven big banks: Wells Fargo, Bank of America, Truist (formerly BBT), Capital One, JPMorgan Chase, PNC Bank and U.S. Bank.

Zelle was not immediately available for comment Wednesday morning.

See also: Class-Action Lawsuit Dropped Against Wells Fargo, Zelle

“Despite Federal laws requiring the reimbursement of unauthorized electronic fund transfers, several major U.S. banks have refused to cover some customers’ fraud claims related to scams taking place on the Zelle payment system,” Schubert Jonckheer & Kolbe said in a press release.

The firm says there have been multiple class-action lawsuits against Zelle, including federal suits in California, Florida, and Washington.

The case that was withdrawn last week came out of Washington. It had claimed that the plaintiff, Seattle resident Luke Hartsock, was robbed of $7,500 through a scam carried out over Zelle. Wells Fargo did not refund the money, the suit said, despite a legal obligation to do so.

“Nowhere in Zelle’s marketing does Zelle warn potential users of the risks of being scammed by persons impersonating their banks,” the lawsuit said. “Consumers are not aware that transactions with Zelle differ from other similar platforms.”

Related: Senator Questions CFPB Director Chopra About Zelle’s Fraud Allegations

In April, U.S. Sens. Bob Menendez and Elizabeth Warren wrote to Early Warning Services to ask about the rise of scams on Zelle and the company’s alleged failure to address the issue.

Zelle, introduced in 2017, saw $490 billion in transaction volumes last year, thanks to its ties to the country’s banking giants. But as the volume of transactions rose, fraud cases increased as well, the letter said, to the point that Zelle has become the “preferred tool for grifters.”