Zelle, the digital peer-to-peer payment platform that allows users to make immediate transfers across different banks, is under fire as a class action lawsuit alleges that the company falsely advertises its security features. The Zelle class action lawsuit, filed in a California federal court, claims that the company does not do enough to protect customers from fraudulent activity on its platform.
This is not the first time that Zelle has been accused of being insecure; in 2017, consumers reported losing over $80 million to fraudsters who used Zelle to transfer money. Neither is it the first time a major financial institution has been subject to a class action; in 2013, Bank Of America settled a lawsuit for $2.4 billion dollars after its acquisition of Merril Lynch & Co.
Zelle is marketed as a convenient and safe way to send money to friends and family with just a few clicks. However, the Zelle class action alleges that they do not provide customers with adequate security measures to protect their personal information or funds.
The Zelle class action, filed by lead plaintiff Dele Hope on behalf of himself and others similarly situated, alleges Zelle’s owners: JPMorgan Chase Bank, N.A., Wells Fargo & Company, Bank of America Corporation, Citigroup Inc., U.S. Bancorp, PNC Bank NA, and Capital One Financial Corporation, falsely advertise the payment service as “secure.”
According to the lawsuit, Zelle’s owner banks “have known for years” about the security risks associated with the payment service but have failed to take steps to mitigate those risks. As a result, customers’ personal and financial information is at risk of being compromised.
According to Hope, Zelle encourages bank account holders to sign up for the service by marketing itself as a fast, safe, and secure way for consumers to send and receive money. However, this is false, he says. “In fact, there are huge, undisclosed security risks of using the service, including from fraudsters who regularly exploit the service,” Hope claims.
“Zelle’s marketing representations never inform users that consumers — not Zelle or the banks through whom money is transferred — bear the full risk of these grave security and fraud threats,” the class action states.
The class action lawsuit seeks damages for customers who have used Zelle as well as injunctive relief to force the banks to improve the security of the payment service. If you have used Zelle, you may be affected by this class action and should contact an attorney to discuss your legal rights.
Dele Hope v. Early Warning Services LLC: How Was The Lead Plaintiff Affected?
The Zelle class action lawsuit alleges that the company has been fully aware of a major fraud problem on its platform and yet the banks that own it never reimburse victims for their losses.
In Hope’s case, he was defrauded by a scammer out of $395 in 2020. He used Zelle to send his money, but when he realized that he was fallen victim to fraud, he immediately informed the bank but they refused to reimburse him. Hope is seeking damages, restitution, and an injunction to prevent Zelle from continuing its allegedly illegal practices.
He’s looking to represent anyone who signed up to send and receive payments via Zelle and incurred unreimbursed losses due to fraud, plus a California subclass. He also seeks certification of class action, damages, fees, costs, but most importantly a jury trial.
Zelle’s Accusations In The Past Do Not Help Their Image
This is not the first time Zelle has been accused of false advertising. In 2018, the Federal Trade Commission (FTC) filed a complaint against Early Warning Services, the company that operates Zelle, alleging that the company misled consumers about the level of security provided by the payment service.
The FTC’s complaint alleged that Early Warning Services falsely advertised that Zelle was “the safest way to pay someone you know” when, in reality, the payment service did not have adequate security measures in place to protect consumers’ personal and financial information.
Although the complaint received attention from major media platforms and was widely covered in the news, it eventually died down and the payment service continued business as usual. However, the FTC made sure to alert consumers of these security risks, not only from Zelle but also from other payment services such as Venmo and Cashapp.
In a 2020 article on their website, they warned customers of the potential frauds. “The thieves pretend they are someone you know asking for money – say, an emergency situation. Others say they’re with the app company or your bank, while others may have access to your contacts and might trick you into thinking they’re someone you’ve sent money to before,” the Federal Trade Commission reports.
Here are the FTC’s tips to empower yourself against scammers when using Zelle and other mobile payment apps:
- Never send money to anyone you don’t recognize.
- If you get a cash request from someone you do recognize, call or contact them using a number you know to be right. Confirm they made the request before you send money – even if you’ve sent them money through the app before.
- When you use an app for the first time, it will usually ask permission to access information on your device – like your contacts – to make payments easier. If you’re not comfortable with that, deny access or uninstall the app.
- Read your bank statements closely and regularly. Ask the app company and your bank to reverse any transactions you didn’t authorize.
As the Zelle class action lawsuit debacle unfolds, it will be important to watch how Early Warning Services LLC responds. The company has already been hit with a class action lawsuit and an FTC complaint, so they are certainly on the defensive. However, if they can provide clear evidence that their system is as secure as they claim and that consumers were not actually harmed by the use of Zelle, then this may all blow over relatively quickly. Unfortunately, for now, it appears that Zelle is yet another financial service in hot water with consumers.
If you have been affected by Zelle’s false advertising or if you are concerned about the security of your personal information, you should contact an experienced class action attorney to discuss your legal rights. You may be able to recover damages for any losses you have suffered as a result of Zelle’s false advertising. Additionally, the Zelle class action lawsuit may help force the mobile payments app to improve its security measures to better protect consumers’ personal and financial information.