These Big Banks Are Finally Doing Something About Zelle

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Payment apps have become increasingly common tools for making financial transactions between friends, family members and even strangers. As convenient as they are, some of the most popular payment apps have some very big drawbacks when it comes to consumer protection, including how tough it can be to get a refund.

Money expert Clark Howard has long pointed out how dangerous it is to use Zelle. But now, there seems to be some good news on that front: “It looks like big, bad Zelle is finally, tentatively turning around some of what makes it so dangerous for you to ever use that thing,” Clark says.

Several news outlets report that the seven big banks that own Zelle are in the process of developing a new policy to create a “playbook” that would standardize the refund policy for customers.

Big Banks May Finally Bolster Zelle Consumer Protections

“Under the planned rules, if the banks determined that a customer had been deceived into sending money, the recipient bank — the one holding the thief’s bank account — would be responsible for returning the money to the victim’s bank,” reports Yahoo News. “That bank would then refund its defrauded customer.”

The seven banks that own the company that runs Zelle are Bank of America, Capital One, JPMorgan Chase, PNC, Truist, U.S. Bank and Wells Fargo.

Can Zelle Refund Money if You Get Scammed?

As of now, Zelle’s policy around refunds is nonexistent. Although the platform allows you to report a scam, on its website it says, “… we are unable to assist with getting your money back.”

Once you file out an online form, Zelle’s website says, “We will report the information you provide to the recipient’s bank or credit union to help prevent anyone else from having the same experience.”

As Clark has said many times, criminals have been able to exploit Zelle users by scamming them out of their money. 

“Big, bad Zelle has hurt so many people who have had money stolen from their bank accounts, and the big banks who have created this Zelle zombie monster have kind of looked the other way,” Clark says.

How Would the New Zelle Refund Policy Work?

“Under the rules, what’s going to happen is if you meet the new Zelle fraud guidelines, and money’s been stolen from your account, the bank that you use will grab the money from the bank the money went to. And they won’t lose any money, and they’ll be happy to give the money back,” Clark says. “But the circumstances the banks are testing – there’s a test going on right now – when you’ll get a refund for Zelle fraud activity is still going to be a very narrow set of circumstances.”


According to the Wall Street Journal (subscription required), here are some Zelle payment scenarios that the big banks are discussing:

  • Customers scammed into sending money would get a refund from their bank.
  • The new rules would not apply to “customers seeking refunds for goods or services they say they didn’t receive, or for people whose errant payments are the result of typos,” the Journal reports.
  • Financial institutions that don’t agree to the new rules would be kicked out of the Zelle network.

How To Know if Zelle Is Active on Your Bank Account

Because nearly 1,700 banks and credit unions are in the Zelle network, there’s a good chance that your financial institution is a partner as well. That means that Zelle may be enabled on your account, and you may not even know it.

“What you need to know is that your bank or credit union may have put Zelle active on your checking account without telling you,” Clark says. “You need to check: Sign in with your app on your phone or on the website of your bank or credit union. And if Zelle is active on your account, if there’s a button you can click to make it inactive, do so. Only when you’re making a payment to someone you know and trust would you ever want to make it active.”

Final Thoughts

The new Zelle refund policy could go into effect “as soon as early next year,” the Wall Street Journal article says.

Clark says the talks that the banks are having about Zelle are a step in the right direction, but there’s still so much more work to do.

“I still say the best answer is: Don’t use Zelle. It’s not thought out and does not offer the federal protections that other methods of paying for things do.”

As alternatives, Clark is a big fan of credit cards and never debit cards.

“Nothing beats credit cards for paying a bill in terms of the fraud protections for you that exist. Nothing else comes close,” he says. “And using the payment apps – like Venmo, CashApp, PayPal or Zelle – the problem with all of them is that there’s no code written that clearly specifies the protections for you as a consumer.”

Clark also uses popular digital wallets like Apple Pay and G Pay (Google Pay), which give you a layer of consumer protection you wouldn’t have otherwise when paying electronically.

Read our in-depth guide on how to use Apple Pay and G Pay.