JPMorgan, Other Banks in Talks to Reimburse Scammed Zelle Customers

JPMorgan, Other Banks in Talks to Reimburse Scammed Zelle Customers

Volume and sophistication of fraud on Zelle payment network draw attention of lawmakers

Banks that own the Zelle payment network want to boost security as scams dupe customers into transferring money.PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL

By David Benoit


and AnnaMaria Andriotis


Nov. 28, 2022 5:30 am ET

Some of America’s biggest banks are devising a plan to compensate customers who fall victim to scams on their Zelle payment network.

JPMorgan Chase JPM 0.19%increase; green up pointing triangle & Co., Wells Fargo WFC 0.23%increase; green up pointing triangle & Co. and Bank of America Corp. BAC 0.24%increase; green up pointing triangle are among the banks in advanced discussions to create a playbook for refunding customers and each other for illegitimate transfers, according to people familiar with the matter. The idea is to boost security and consumer trust in Zelle, the peer-to-peer payment system jointly owned by a consortium of banks, the people said.

The pandemic supercharged money-transfer services. Zelle recorded some 1.8 billion transactions in 2021 totaling $490 billion, more than double prepandemic levels.


Scammers often seek to trick Zelle users into sending them money under the guise of customer support.

Swindlers send emails and texts that purport to come from the customer’s bank. Sometimes the scammers call their unwitting victims from phone numbers that display on caller IDs as the bank’s customer-support line.

The scammers then persuade a Zelle customer to send money to what appears to be her own bank accounts. In reality, the scammer has linked the person’s phone number to a fraudulent account.

Banks are required to refund customers for transactions they didn’t authorize, but there is no such protection for customers who are duped into sending money. The growing volume and sophistication of peer-to-peer scams has spurred lawmakers, including Massachusetts Democratic Sen. Elizabeth Warren, to pressure banks to do more to help fraud victims.

Zelle operator Early Warning Services LLC said fraud and scam claims have been made on only a tiny slice of payments—less than 0.1%.

“Our team devotes significant time and resources to protecting consumers every day and has done so since the launch of Zelle in 2017,” an EWS spokeswoman said. “Part of our work includes collaborating with our financial-institution participants to evolve and enhance our networkwide rules to better protect consumers.”

Banks on the Zelle network have their own policies for dealing with scams. Some already refund customers who were tricked into sending money into an account other than their own.

The conversations they are having now center on standardizing refund procedures, according to people familiar with the matter. By agreeing to share liability inside Zelle’s system and guaranteeing to reimburse each other, the banks hope more customers will get their money back, the people said.

Here is how the plan would work: If the banks determine that a customer was tricked into sending money, the bank that houses the deposit account where the funds were sent would return the money to the victim’s bank. The scam victim would get a refund from her bank.

The seven owner banks of EWS are still ironing out the plan’s details, the people said. Zelle’s owners also include Capital One Financial Corp., COF 0.09%increase; green up pointing triangle PNC Financial Services Group Inc., PNC 0.69%increase; green up pointing triangle Truist Financial Corp. TFC 1.06%increase; green up pointing triangle and U.S. Bancorp USB 0.34%increase; green up pointing triangle.

The new rules being discussed wouldn’t extend to customers seeking refunds for goods or services they say they didn’t receive, or for people whose errant payments are the result of typos, people familiar with the matter said. Those customers still wouldn’t be eligible for refunds.

The new refund rules could kick in as soon as early next year, the people said. The banks are running tests to make sure the changes wouldn’t result in a fresh surge of scams, they said.

If the new rules are put in place, financial institutions that participate in Zelle would have to agree to them or risk being kicked out of the network, people familiar with the matter said. More than 1,800 financial institutions allow their customers to send and receive money through Zelle.

The Consumer Financial Protection Bureau has been preparing new guidance aimed at prodding banks to reimburse more customers who fall victim to scams on Zelle and other money-transfer services, The Wall Street Journal previously reported.

“Reports and consumer complaints of payments scams have risen sharply, and financial fraud can be devastating for victims,” a CFPB spokesperson said in a statement. “The CFPB is working to prevent further harm, including by ensuring that financial institutions are living up to their investigation and error-resolution obligations.”

Many scam claims turn out to be legitimate payments that customers simply don’t recognize, according to bankers. Banks have access to mobile-phone location data that helps them vet claims. They have also added extra alerts and confirmations to try to reduce errant payments, alongside fraud-prevention campaigns.

Write to David Benoit at and AnnaMaria Andriotis at