Zelle, the popular payment app backed by the big banks, has become such a security risk that only people with money to lose should use it.
That's the advice from money expert Clark Howard, who is on record as warning consumers to stay away from Zelle due to previous infractions.
A good reason not to use Zelle: Banks offer no consumer protection
Hackers have figured out that Zelle and similar apps are low-hanging fruit when it comes to stealing people’s hard-earned money, Clark says.
Here’s their latest strategy: You think you’re buying something online on a marketplace site like Facebook or Craigslist and the seller tells you to pay using Zelle.
Once you do that, the seller (scammer) simply takes your money, shuts down their bank account and never sends the product, according to TechCrunch.
The kicker in all this is that Zelle users have virtually zero recourse for getting their money back.
The banks behind Zelle — JP Morgan Chase, Bank of America, Wells Fargo and more — have been largely silent on problems with Zelle fraud protection.
Clark says the fact that Zelle being fully integrated into the banking system is what makes it different from the other payment apps from a security perspective, as well as fraud protection.
Many banks have built Zelle into their apps. Here’s the Wells Fargo app. You can see there’s a “Send Money with Zelle” button dead-center:
Because real bank accounts are involved — and you figure that the big banks are backing and securing the transaction — many people feel a false sense of security when using Zelle.
The banks’ position has been that if you agree to send money to someone, there’s no turning back. Here’s what it says in Zelle’s fine print:
So, unlike with a credit card, there’s no mechanism for reversing or disputing a payment once you’ve made one using Zelle.
If you take nothing else away from this, let be that Clark absolutely doesn’t want you to set up Zelle if your bank offers it.
However, other payment apps can be useful when it comes to transferring money to family, friends and trusted merchants. Here is the #1 thing you need to do if you use payment apps.
Here are more Clark.com articles you might enjoy
- Best online banks: Free checking and high-interest savings accounts
- How to switch to a better bank for you
- Clark Howard: Why you need to give online banks another look
The post New warning: How scammers are robbing people through the Zelle app appeared first on Clark Howard.