More than 17 million Americans were the victims of fraud on digital wallets or peer-to-peer payment apps in 2020. A large proportion of these crimes took place on Zelle, according to the New York Times.

Why should we care?
Zelle, which is owned and developed by a collective of banks, has marketed itself as the secure in-house alternative to fintech rival Venmo. In one marketing campaign, actor and rapper Daveed Diggs touted Zelle’s unique selling point: “You can send money safely, ’cause that’s what it’s for, and it’s backed by the banks, so you know it’s secure.” Though Zelle has beat Venmo in terms of market share—$490B to $230B—it now has to contend with a growing reputation as a hotbed for scams, making Diggs’s rap more cringeworthy than it already was. This scammy development is partially the fault of banks; in many cases, they’re refusing to reimburse defrauded customers, denying liability when customers unknowingly approved of fraudulent transactions. “It’s like the banks have colluded with the sleazebags on the street to be able to steal,” said Bruce Barth, who had $2,500 transferred through Zelle by a thief. Bank of America rejected Barth’s refund requests, and only approved refunds once contacted by the press. Zelle will remain a go-to platform for grifters as long as its developers favor in-app convenience over security protocols, and banks will have to contend with a reputational blow. We may also expect stricter guidelines from the Consumer Finance Protection Bureau, which, according to a spokesperson, “is aware of the problem and considering how best to address it.” Everyday consumers may grow increasingly wary of fintech in the meantime.