DFCU Blog

There are numerous reports of scammers calling, emailing, and/or texting individuals claiming to be from their utility company – using look-alike phone numbers. The scammer states that they did not receive payment for their utility bill and their service will be turned off. However, if they “Zelle” funds to the company immediately their services will continue. Faced with urgency of service disconnection from utility companies (e.g., electricity, water, etc.), the individuals agree to make the Zelle payment, before thinking of the potential ramifications. In some cases, the fraudster’s even have Spanish speaking “utility employees” to assist with those that do not speak English. The use of Zelle and other P2P services has increased in the last several years. Zelle happens to be one of the most popular P2P platforms used by credit unions, but other P2P applications are not immune to fraud. Regulation E Consideration Credit unions may have members that have fallen for the delinquent utility bill scam and filed a Reg E dispute expecting to be recredited. It does not appear that members victimized in this scam are entitled to Reg E protection. Nevertheless, credit unions must promptly investigate these claims in accordance with Reg E’s error resolution requirements. The delinquent utility bill scam is different than the traditional Zelle scam where the fraudsters initiate the Zelle transfers after successfully resetting members’ online banking passwords. Consumers being victimized in a variety of Zelle-related scams is a hot topic. A group of U.S. Senators are pushing the CFPB to use its rulemaking authority under Reg E and the Electronic Fund Transfer Act (EFTA) to provide more protection to consumers victimized in Zelle-related scams. Reg E provides protection to consumers for “unauthorized EFTs” but not when they’re scammed into initiating the Zelle transfers themselves, with the exception of a “token error” that occurs in the new version of the Zelle / P2P scam (referred to as the “Zelle yourself scam”). In fact, U.S. Senator Elizabeth Warren, a member of the Senate Banking, Housing, and Urban Affairs Committee, issued a report on rampant Zelle fraud.