One of the latest victims of a growing banking scam is a Los Angeles woman who lost $18,000 after being conned by scammers posing as her bank.

Lura Ball shared with local news outlet ABC7 that she became an unsuspecting victim after she received a text which appeared to come from Bank of America. Following the text, Ball received a phone call that also appeared to come from Bank of America as well. After answering the phone, the scammer posed as a customer service representative for Bank of America and alerted her that there were several attempts of fraud against her account. The scammer told her that because they caught the fraud early, they could reverse the transaction so that the money did not leave her account. All she had to do was transfer the money back to herself using the app, Zelle.

Zelle is a popular person-to-person payment app that has been widely accepted by many banks including Bank of America. The app offers a streamlined no-fuss way to send money to other Zelle users. To send funds, customers only need to type in the phone number or the email address of the individual they want to send money to.

In Ball’s case, the scammer walked her through how to send money back to herself using Zelle. In reality, the scammers were actually tricking Ball into sending them the money instead. In total, the scammers managed to swindle Ball out of $18,500.

Ball explained, "All of a sudden I started getting alerts from one of my other emails saying that I had transferred money to a Chase account and I said 'what?'"

Zelle Scams on the Rise

Scams through Zelle have been on the rise across the nation, particularly with users of Bank of America. Individuals who have been scammed through the app recount a similar story of being contacted by individuals claiming to be with Bank of America. These scammers are able to use spoofing technology which allows them to change their number so that it appears to be coming from a bank and not an unrecognizable number. In every instance, victims recount being told to send money to themselves.

Banking experts explained that although the victims are typing in their email address or phone number as the destination for their money to be sent to, the scammers are able to access the bank accounts beforehand and change the user profile so that it includes their own phone number or email address. That way, when victims send money, they are unknowingly sending it to another individual and not to themselves.

With the sophistication of scamming and the intentional targeting of the Zelle app, victims of this elaborate scam have routinely turned to their bank to remedy the fraud. However, many of these banks, particularly Bank of America, explain that because Zelle is a third-party app, they do not have control over Zelle operations. Once the transaction takes place through Zelle, they are unable to stop it, even if the transaction is still pending. When the local news outlet reached out to Bank of America on behalf of Ball, Bank of America issued a statement that explained, “Banks would not ask a customer to transfer funds between accounts or 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 and never transfer money as a result of an unexpected call or text.”

For many victims, including Ball, blanket statements like these are not enough. Despite the efforts of big banks to educate consumers on fraudulent practices and scams, scammers have leveled up in sophistication, being able to dupe even the most alert consumer. In many instances, consumers rarely see their funds returned unless intervention takes place from local news outlets like ABC 7. In Ball’s case, Bank of America has denied her claim for reinstatement of her funds at least twice.

What Protections Do Scam Victims Have?

The New York Times reports that because of the ease of use Zelle offers, and its quick user-to-user service, scams on Zelle have exploded over the past couple of years. The Times cites information compiled by Javelin Strategy & Research, an industry consultant, that in 2020, over 18 million Americans were defrauded because of scams involving digital wallets and person-to-person apps like Zelle.

The Times also highlights that although Zelle is operated by Early Warning Services, the app’s operating company was actually created by seven big banks including Bank of America, Capital One, JPMorgan Chase, PNC, Truist, U.S. Bank, and Wells Fargo. Despite Zelle being the brainchild of these big banks, many consumers find it baffling that these banks cannot step in to reverse fraudulent transactions induced by scammers.

Still, the big banks contend that Zelle is a third-party company. Because it's not directly connected with these banks themselves, they do not have any control over scams that take place on the platform. Banks including Bank of America detail that once an individual authorizes a transaction on Zelle, they no longer have the ability to redact that transaction.

Regulators have echoed a similar sentiment. Banks are required to reimburse customers only if there are transactions that were “initiated by a person other than the consumer without actual authority to initiate the transfer.” Essentially, this fraud protection only covers individuals who have money moved from their account without their permission. In cases like Ball's, where the money was transferred after she authorized it, she is no longer covered under that fraud protection.

There is a glimmer of hope for individuals who have been victims of Zelle scams in the form of the Electronic Transfer Act and specifically, Regulation E of the act. Under this regulation, victims of scammers may be able to hold banks liable because the act protects against electronic fraud that is coerced. In June, the Consumer Financial Protection Bureau put out a directive that detailed the law applies "if a third party fraudulently induces a consumer into sharing account access information." Essentially, if an individual is tricked into sending money to a scammer, they could be protected under the regulation of fraud.

As scammers continue to evolve in their efforts to trick consumers out of their hard-earned money, so too does the law. But while the law is slow to catch up, banks continue to encourage consumers to educate themselves on the latest scams going around. Practicing simple habits like calling the bank yourself if you are alerted to fraudulent activity on your account can also save you heartache in the long run.