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Warren Presses Wells Fargo CEO to Address Marketplace Scam

— October 21, 2022

Bank is pressured to do something about Zelle fraud.

With Zelle, which was rolled out in 2017, customers can send money to others through their banking app on their phone or computer. There’s no fees or charges for transferring funds and the money is deposited directly into the recipient’s account. Initially more than 30 U.S. banks and credit unions adopted Zelle, and by its one-year mark, 95 million customers had access to the service, surpassing the popular instant transfer app by PayPal, Venmo.  In theory, Zelle is simple to use, quick and effective. However, recently, a Zelle Facebook Marketplace scam has been circulating, taking advantage of its large customer pool.

The scam contacts sellers requesting to buy an item they’ve listed by paying with Zelle. If the seller agrees to this form of payment, the buyer then asks for their email address to send the money to through the app. However, the funds never arrive. Instead of fronting the money, the buyer sends a fictitious email supposedly created by Zelle alleging that the buyer paid for the item and the seller must upgrade to a Zelle business account in order to receive payment. This costs a few hundred dollars.

Warren Presses Wells Fargo CEO to Address Marketplace Scam
Photo by Anderson Guerra from Pexels

In a letter dated earlier this month and made public within the past week, Senator Elizabeth Warren unveiled to Wells Fargo CEO Charles Scharf what she called an “alarming pattern” of customer disregard “made worse by the bank’s refusal to make its Zelle scam and fraud data public.” It is almost as if Zelle is purposely suppressing information about the scam in order to take advantage of the many business accounts being created to finalize transactions.

In her letter, Warren, on the Senate Banking Committee and a well-known bank critic, said that Wells Fargo customers are reporting the scheme this year at “a rate nearly 2.5 times higher than in 2019 and twice as high as those of other banks.” She and other legislators are looking to hold the bank more accountable by disseminating information about what’s happening and ensuring customers are more protected against fraudsters.

Thousands of people use Facebook’s Marketplace to buy and sell goods easily online, either to be shipped out or for in-person pick up. Social media users simply place an item in the Marketplace, which is like Craigslist (a site that typically only includes in-person sales). Many people have had success conducting business through Facebook, but unfortunately, the scam has made many one-time Marketplace go-tos much more cautious about continuing to use it. It has yet to die down and once again create a safe place of exchange.

In a statement responding to Warren’s letter, a Wells Fargo spokeswoman refuted the claims, saying, “As a member of Zelle, we’ve seen the number of transactions double in just three years, yet in 2022, 99.94% of our customer transactions occurred without incident. We don’t believe the numbers in a recent report are done on a comparable basis, and therefore the analysis is misleading and inaccurate,” said bank spokeswoman Amy Bonitatibus. She added that their data showed Zelle’s fraud and scam rates were consistent with the industry and not twice as high compared to other banks.


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