Scams targeting Zelle app users rising as criminals get more creative; how to avoid losing thousands

CHICAGO -- More victims are reaching out to the I-Team about scams preying on people using the popular money transfer tool Zelle after an I-Team investigation into a scheme in August.

READ MORE | Scam targeting Bank of America, Zelle users steals thousands through mobile app payment

Scammers are using transfer apps for different scams which can cost you thousands of dollars. Here's how you can avoid all of them.

The first and most important tip is: Never Zelle yourself.

"It's just scary because he had my name, date of birth and my account number. Like who the heck would have all that information?" said Demi Woods of McHenry, Illinois.

Woods lost $3,500 after getting what she thought was a call from her bank. Her caller ID showed, "Bank of America," but Instead it was a scammer telling her that there were thousands of dollars in so-called fraudulent withdrawals from her account via Zelle.

"They even said over the phone, 'whatever code you get, we are not going to ask you for so don't tell me the code.' So I don't know how much more legit it could sound," she said.

The caller told her to Zelle herself to get the money back, which would cancel the alleged fraudulent transactions.

"It had my first and my last name in the "to" section and the "from" section. And then after I hit send all of a sudden, the two sections changed to some bank I've never heard of," said Woods.

The FBI warns that criminals are using this trick to create a false sense of security.

"You think it's safe; you're sending money to an account that has your name on it, that does not mean anything, that's very easy to spoof," said Siobhan Johnson, special agent and public affairs officer for FBI Chicago. "They can pretend to be your bank, they can pretend to be your money transfer app."

The second tip: Beware of fake Zelle emails.

Another scam involves phishing emails made to look like they are from Zelle.

Bank of America customer Jiaming Chong sold a camera online. He never got paid for the camera and lost another thousand dollars. In total, he lost $4,200.

"He was going to send me the money actually via Zelle," said Chong.

The buyer was a fraudster who fooled him into clicking on a phishing email, which asked Chong to reimburse the buyer $1,000 to allegedly upgrade the buyer's Zelle account. Chong sent that upgrade money in gift cards and now it's all gone.

"Slow down and take a look at what's being asked and say 'does this make sense?' advises Johnson.

Zelle told the I-Team, "that Zelle will never email you or call you to request money." Look out for emails with bad grammar, spelling errors and hover over the senders 'address to make sure it's not fake.

The third tip: Prevent hacked withdrawals by having a strong, unique banking password and use 2-factor authentication.

In a third scam, a victim's bank account was hacked.

"I was shocked", Dharmapad Mishra told the I-Team. "I mean, how can people actually get into your account and steal money?"

Mishra lost $4,450 in unauthorized Zelle transactions after his Zelle account, within his Bank of America account, was compromised by hackers.

The FBI said all of these money transfer scams are on the rise because people don't want to use cash.

"There are very few safeguards in place to get your money back when you're using these applications and so it's kind of a scammers dream," Johnson added.

Bank of America refunded Woods and Mishra and are trying to get a hold of Chong. The company told the I-Team that scammers are spoofing numbers to appear as though they are legitimate businesses, and added, "We remind clients that they should not provide confidential account information to unidentified individuals...legitimate companies would not ask a customer to transfer funds between accounts in order to help prevent fraud nor request sensitive account information."

Zelle said if a red flag goes up about a transaction, they will notify the bank to send an alert to the user.

"Scammers are going to try to make them move quickly, so take 10 minutes and reevaluate the situation; there's time to call the company itself and make sure that this is a real transaction," Johnson advised.

Bank of America has recently added a new alert to its app, saying the bank will never ask you to transfer money to anyone, including yourself, and that you should never transfer money as a result of an unexpected text or call.

FULL BANK OF AMERICA STATEMENT:

In cases like this, scammers may spoof legitimate phone numbers and impersonate legitimate businesses and attempt to convince individuals to provide their personal information. We remind clients that they should not provide confidential account information to unidentified individuals. Bank of America and other legitimate companies would not ask a customer to transfer funds between accounts in order to help prevent fraud nor request sensitive account information. We alert clients during the transaction if they are sending money to a new recipient that they should only send to people they trust.

Additionally, they see: "BEWARE: Bank of America will never ask you to transfer money to anyone, including yourself. Don't transfer money as a result of an unexpected text or call." To move forward with the transaction, they need to click OK.

We also have a number of measures in place to proactively warn clients about scams, and we periodically reach out to customers with information about how to stay safe and avoid scams. In addition, we keep clients informed about new scam alerts through our Client Security Center on our website (https://www.bankofamerica.com/security-center/avoid-bank-scams/).

The bank also provides the following information on our security site:

-Know the best ways to avoid being scammed

-Don't respond: If you're not 100% certain of the source of the call, email or text, then hang up the phone, don't click on the link in the email and don't reply to the text message.

-Don't trust caller ID or answer phone calls from unknown numbers: If you recognize the caller ID but the call seems suspicious, hang up the phone. Phone numbers can be easily spoofed to appear to be from a legitimate caller.

-Don't give out your information: Never provide any personally identifiable information unless you're absolutely certain the person and reason are legitimate. Remember: Bank of America will never ask you to send us personal information such as an account number, Social Security number or Tax ID over text, email or online.

-Research and validate: If the individual or organization seems suspicious, make sure the request being made is legitimate by calling the organization through an official number from their website or consulting with a trusted family member or friend.

EARLY WARNING SERVICES - ZELLE:

Scammers are sending emails that may look like they're from a legitimate organization. Zelle will never email you or call you to request money. Payments sent with Zelle generally do not incur transaction fees, but consumers should check with your financial institution to confirm.

Here are some red flags to watch for and to help consumers avoid phishing scams:

Look out for emails with bad grammar and spelling errors.

Double check the sender's email address to ensure it matches what is provided on the organization's legitimate website.

Avoid opening attachments or clicking on links in a suspicious email.

Beware of emails requesting login credentials, payment information or sensitive data.

And remember, if it sounds too good to be true, it probably is.

We are constantly looking to improve how we battle fraud and scams while evolving with consumer expectations of payments. Recently, we introduced an offering called Risk Insights for Zelle that allows financial institutions to better identify potential fraud and scams to help protect consumers. With Risk Insights for Zelle, the sending financial institution can assess information about the recipient's token behavior in the Zelle Network. If there are risk indicators about the transaction, the sending FI can provide an alert and education on scams and fraud to provide the consumer an opportunity to pause and reconsider before sending the money. We realize that no single tool can solve for widespread fraud, but we continue to work to discover ways that data and technology can help us predict what might happen next and support the capabilities of participating FIs.

We are also collaborating with industry partners like the Cybercrime Support Network, recently co-hosting a LinkedIn Live with Cybercrime Support Network to discuss how financial institutions can use education and proactive media campaigns to help consumers avoid fraud and scams.