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Credit union credits Broomfield woman after she lost nearly $2,000 through unauthorized Zelle transactions

18 million victims of scams involving Zelle, other money transfer apps in 2020
Blue Federal Credit Union
Posted at 8:19 PM, Sep 02, 2022
and last updated 2022-09-02 22:19:19-04

DENVER — A sense of peace and normalcy has been restored for Broomfield resident Dena Mendoza after a long and emotional two months.

In June, Mendoza lost nearly $2,000 in a scam. She noticed more than 10 unauthorized transactions through her Zelle account, a peer-to-peer money transferring app that her financial institution, Blue Federal Credit Union, partnered with in March.

Last week, Mendoza says BlueFCU credited the full amount back following a Denver7 story that aired Aug. 19, which highlighted the struggle to retrieve those funds from the credit union.

"They've made me have assurance and security back with the credit union itself and also with implementing extra securities for me," Mendoza said.

Typical Zelle scams involve someone posing as a bank employee and telling a customer that fraudulent activity is happening with their bank account, only to gain sensitive information that allows the scammer to compromise the account and take money.

Mendoza says that wasn't the case for her and has no idea how the scammer got her information and gained access to her BlueFCU account.

At first, BlueFCU determined that the transactions made on Mendoza's Zelle account were authorized by her. Several days after Denver7's story, BlueFCU credited her money back.

BlueFCU agreed to an on-camera interview with Denver7 Friday — a rare move for a banking institution asked about scams involving Zelle and the consumer protections in place for their customers.

According to Bobby Matthis, the credit union's vice president of digital innovation, BlueFCU serves over 100,000 customers, and about five to 10 percent of them have activated their Zelle account.

"I will tell you, it's an incredibly high demand service," Matthis said.

But Matthis acknowledged there are downsides with new technology.

"While payment technologies advance, it also opens the door for fraudsters," he said.

Matthis said BlueFCU goes above and beyond to educate its customers about account security by hosting seminars, emailing customers security tips, alerting them to different scams and working with them personally to fortify their accounts.

Still, 18 million people were impacted by scams involving money transfer apps like Zelle in 2020, according to a letter several U.S. senators sent to the company that created Zelle, Early Warning Services, LLC, which is owned by seven of the largest banking institutions in America, including Wells Fargo, Bank of America, Truist, JP Morgan Chase, Capitol One, PNC Bank and U.S. Bank.

The letter pressed the company and banking institutions that partner with them to implement more consumer protections for customers, as countless victims never get their money credited back following these scams.

Denver7 asked Matthis if there is a lack of consumer protections for their customers in these situations.

"That's a gray area... it's too hard to put a blanket across it," Matthis said. "You have to take it case by case... I believe [BlueFCU] works very hard with our members to understand the circumstances around it, partner with them and do everything we can to help them recover those funds."

Matthis said less than one percent of BlueFCU customers receive any credit back after asking it to investigate suspicious activity on their Zelle app.

"If the root of the fraud, or the root that caused the fraud to occur to that person, happened outside of our influence, all we can do is to help support them and help them find the cause and where all that happens," Matthis said.

Scams involving credit and debit cards have more consumer protections in place and result in higher rates of crediting back customers. Matthis did not confirm that rate with Denver7 during the interview Friday.

"When you have a case of someone has a lost or stolen card, or anything like that, the burden of proof is put onto the merchant to prove that that person was there, or to show evidence that they went through some kind of identification process to confirm that the person using that card or card payment online is that person, right?" Matthis said. "By having the multiple pieces of information with person-to-person type payments, it motivates you, encourages you to only utilize that to pay people close to you, like friends or family or people you trust, right? I'll tell you, what's typical in person-to-person payments is it'll ask you to confirm, "Are you sure you want to send this person money?" Because again, it's real intention is for trusted payments."

Credit union credits Broomfield woman after she lost nearly $2,000 through unauthorized Zelle transactions

"Banks and credit unions are confused, or at least don't apply the law correctly," said Lauren Saunders, associate director of the National Consumer Law Center, speaking in generalities and not specifically about any particular banking institution.

Saunders is referring to the Electronic Fund Transfer Act, which is implemented by Regulation E.

"The law says that your bank account and your credit cards are protected against unauthorized charges against those accounts, and it doesn't matter whether it's by credit or debit card or whether it's via Zelle, and it's the bank's responsibility to investigate," Saunders said. "We see very inconsistent responses. Sometimes banks take care of the problem right away. Sometimes they say, "Well, we think you did authorize it, even though you're saying it wasn't you.""

Mendoza showed a letter BlueFCU sent her following their initial investigation that claimed she authorized those transactions.

"They really didn't know what was going on until you reached out to them before you interviewed me," Mendoza said.

But it's something Mendoza wants to put behind her. She says her more than two-decades long relationship with the credit union will continue, as they've shown professionalism, empathy and helped her resolve the issue, ultimately crediting her back the $1,800 she lost.

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