Zelle scam: Lawsuit claims Bank of America failed to warn customers of possibility of being scammed using the app

OAKLAND, Calif. (KGO) — 7 On Your Side has reported on the many scams that drain victims’ bank accounts using Zelle, the popular quick payment app owned by big banks. Fraudsters use a variety of schemes to trick victims into sending them money. Transfers are so fast that they cannot be traced or reversed.

Now, a class action lawsuit claims Bank of America failed to warn customers of the risks of sending money through Zelle.

Zelle is the most widely used peer-to-peer payment app in the country. Hundreds of banks automatically add Zelle to their online and mobile banking apps. It’s simple to use and the money goes fast. Which makes it the perfect tool for scammers.

7 On Your Side interviewed many Bank of America customers who were tricked into sending money to banking imposters using Zelle. Everyone was shocked to learn that Bank of America offers no fraud protection for Zelle transactions.

RELATED: Bank of America Won’t Say Why It Reimbursed Some Zelle Scam Victims But Not Others

Today, Bank of America is defending a federal class action suit claiming it encourages customers to use Zelle without warning them of the “enormous security risks” of linking Zelle to a bank account.

The lawsuit, filed in federal court in Oakland, says Zelle is now the nation’s most popular peer-to-peer payment app with $490 billion in money transfers last year alone.

And yet, he has “a huge fraud problem”.

The lawsuit says Bank of America is aware of the risks to customers, but “always presents Zelle as a safe, free, and convenient way to transfer money.”

VIDEO: Bank impostor taunts San Jose woman after stealing $3,500 using her name

Once the money is sent, he says, “there is virtually no recourse for consumers to recover losses” due to fraud.

A Bank of America spokesperson said only, “We disagree with the allegations and will seek to have the case dismissed.”

The plaintiff is a San Jose man who fell for a fake scam. He sent $2,500 to the scammers via Zelle and another $2,400 via Venmo. Bank of America denied his request for reimbursement.

BofA has often pointed to the customer service agreement which says, “Neither the bank nor Zelle offer a protection program for authorized payments.”

VIDEO: California woman loses over $18,000 from ‘Zelle’ after texting scammer, calling him pretending to be a bank

But the suit says the disclaimer is missing from the marketing materials.

BofA initially rejected the claims of those who have been defrauded by these banking imposters over the past two years.

However, after 7 On Your Side pointed out that they had been tricked into sending the money, B of A reversed and refunded each of the customers we brought to their attention.

The class action only names Bank of America as a defendant – not Zelle or Venmo. He asks for relief for B of A customers who have been defrauded through Zelle or other payment apps, without being reimbursed. Bank of America has yet to file a response in court.

Check out more stories and videos from Michael Finney and 7 On Your Side.

Do you have a question for Michael and the 7 On Your Side team? Fill out the form HERE!
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