Bank of America Failed to Warn Zelle Users of ‘Extreme’ Fraud Risks, Class Action Claims

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A proposed class action claims that Bank of America has misled Zelle users by failing to disclose the “extreme risks” that come along with using the money transfer service.

More specifically, the 20-page case says that Bank of America has touted Zelle as a secure, free and convenient way to transfer money while failing to warn accountholders of the “key fact” that there is virtually no recourse for users who fall victim to fraud.

In fact, the lawsuit states that although “virtually every other payment method commonly used by American consumers” includes fraud protection, Zelle does not. According to the suit, “any money transferred for any reason via Zelle is gone forever, without recourse, reimbursement or protection.”

Per the complaint, many users who signed up and used the Zelle service “without the benefit of accurate information” have ended up with “massive” unreimbursed losses due to fraud.

“Such users never would have signed up for Zelle in the first place if they had known the extreme risks of signing up for and using the service,” the lawsuit says.

As the case tells it, the nature of the Zelle money transfer service—particularly, the immediacy with which transfers can be performed and the fact that the funds are not recoverable—has set the stage for a “massive fraud problem” on the network. Per the suit, Bank of America, one of seven banks who operate the Zelle network through a company called Early Warning Services, is well aware that Zelle has been plagued by organized crime and fraudsters yet has failed to warn users of these risks or protect accountholders who fall victim to fraud.

The plaintiff, an Orange County, California college student, is one such Zelle user who claims to have lost over $2,000 to a fraudster through the service. Per the complaint, the plaintiff was searching for an apartment to rent in November 2021 when she found what she believed to be a suitable unit. The case says the plaintiff submitted a rental application and transferred a $150 application fee via Zelle to the purported owner of the property. After being informed that her application had been approved, the plaintiff then transferred via Zelle an $800 security deposit and $1,200 for the first month’s rent, the suit relays.

When the plaintiff arrived at the apartment at the time she arranged with the purported owner, he was “nowhere to be found,” according to the case.

“The fraudster repeatedly called Plaintiff with excuses for his tardiness and reassured Plaintiff that he would be arriving promptly with the keys, but he never showed,” the complaint relays. “At this point, Plaintiff determined she fell victim to fraud and demanded her money be returned. Despite Plaintiff’s demand, the fraudster did not return the money and ceased all communications with Plaintiff.”

After the plaintiff determined that she had been a victim of fraud, she contacted Bank of America, who initially informed her that she would be reimbursed for the lost funds, the case says. According to the complaint, however, the bank ultimately denied the plaintiff’s claim and refused to reimburse the woman for her loss.

The plaintiff looks to represent anyone with a Bank of America account who signed up for the Zelle service and incurred unreimbursed losses due to fraud.

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