Zelle Is Under Fire, But Is It Really a Scammers' Paradise?

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Zelle Is Under Fire, But Is It Really a Scammers' Paradise?

Banking is such a massive, complex business that even a US Senate hearing that runs more than three hours touches on so many topics—climate change, racial discrimination, overdraft fees—that it’s hard for any single issue to get much traction. When the Senate Banking Committee hauls the CEOs of seven of the nation’s largest banks for an annual grilling, much of the time is taken up with grandstanding or an individual Senator’s pet issue.

It was maybe a little surprising, then, that Thursday’s hearing ended up at least partly as a kind of seminar on Zelle, the digital payment service that has attracted a lot attention over the last year as a magnet for fraud and scams.

A bit of background: Zelle is a free payment system now offered with most accounts at large US banks. It is operated by Early Warning Systems (EWS), which has been around since the 1990s and is based in Arizona. EWS is owned by seven of the largest American banks: Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, US Bank and Wells Fargo. As with many digital payment systems, Zelle experienced tremendous growth during the COVID lockdowns. In 2021, Zelle handled nearly half a trillion dollars ($490 billion), up 49% from the previous year and more than double Venmo’s payment volume that year.