Zelle Under Siege: Nearly Half of Payment Scams at Major Banks Traced to One Source
Zelle, the bank-backed peer-to-peer (P2P) payment service, has increasingly become a target for fraudsters, and the issue appears to be growing at an alarming pace.
According to an internal analysis shared by JPMorgan Chase and cited in Feb. 2025 by American Banker, nearly half of all Zelle-related scams reported by its customers stem from contact that originated on social media platforms, including Facebook Marketplace and Instagram DMs.
Chase Leads with New Restrictions on Socially Initiated Transfers
In response to this growing risk, PYMNTS reported the JPMorgan Chase announcement of Zelle-related protective measures which took effect March 23, 2025. The actions include blocking or delaying Zelle transactions flagged as being initiated by social media contacts. As part of the process, customers may be asked to explain how they know the recipient and describe the nature of the transaction. The goal is to add friction to high-risk payments without compromising legitimate uses of Zelle.
This marks one of the most aggressive fraud mitigation moves taken by a large U.S. bank to date. Axios notes that the decision to litigate comes as part of a broader shift in policy following years of criticism from regulators and lawmakers over banks’ inconsistent handling of peer-to-peer fraud claims.
Banks Have Reimbursed Only a Fraction of Scams
One of the major pain points for Zelle users, according to The Daily Hodl, has been the lack of consistent fraud protection. Cited was a wide disparity in reimbursements for customer-reported scams:
- JPMorgan Chase: 2 percent
- Wells Fargo: 4 percent
- Bank of America: 24 percent
Further, inconsistent reimbursement policies have concurrently eroded consumer confidence in Zelle and sparked significant public outcry. That pushback has caught the ear of lawmakers and consumer advocacy groups, which are calling for clearer rules and stronger protections.
CFPB’s Mixed Signals: Lawsuit Dropped, Concerns Remain
In 2024, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Zelle operator Early Warning Services, as well as JPMorgan Chase, Bank of America, and Wells Fargo, alleging inadequate protection of consumers from fraud. This litigation was widely observed and covered by media outlets that included USA Today.
In March 2025, however, the CFPB abruptly dropped the case, a decision that baffled many industry observers. While the CFPB did not elaborate extensively, Investopedia noted that lobbying and regulatory complexity may have influenced the agency’s retreat.
Despite the dismissal, regulators remain active behind the scenes. The Wall Street Journal reported that federal banking regulators continue to probe how major banks are managing Zelle-related complaints and whether internal control systems are up to the task.
The Social Media Vector: A Weak Link in Consumer Education
The common thread in many Zelle scams? Social media. Fraudsters often pose as legitimate sellers on platforms like Facebook Marketplace, coaxing victims into paying for goods or services via Zelle. These platforms offer limited consumer protection and are difficult to police, and preventing them is more a factor of digital literacy and awareness.
Dive Deeper into Social Media & Banking Scams:
Explore more insights on how fraudsters leverage social media to target financial institutions and consumers:
- Pump-and-Dump Fraud: This article explores how social media is increasingly used to manipulate stock prices through deceptive “pump-and-dump” schemes, posing a significant risk to investors.
- $500K Bank Fraud Scheme: Discover the intricate details of a recent federal indictment where social media recruitment played a pivotal role in a sophisticated $500,000 bank fraud scheme involving fraudulent check deposits.
- Viral ‘Infinite Money Glitch’: Get the latest on JPMorgan Chase’s legal actions against individuals who exploited a viral ATM technical glitch, enabling fraudulent withdrawals before checks could clear.
Combating Zelle Fraud: Essential Strategies for Financial Institutions
The confluence of lax social media oversight, inconsistent bank policies, and increasing consumer vulnerability makes Zelle fraud a persistent threat. While institutions like JPMorgan Chase are taking initiative, the broader industry must follow suit. Banks need layered defenses that include payment friction, behavioral analytics, and dynamic warnings for high-risk transfers.
As the payment landscape continues to evolve, so too must the safeguards that protect banks and customers. U.S. banks should take this opportunity to:
- Recalibrate their fraud protocols
- Partner with social platforms on cross-channel alerts
- Build trust by empowering customers with the tools and knowledge to protect themselves
