Zelle users say they’re being scammed — and Congress is taking notice just as the payment app looks to expand

Zelle-ing into the void… America’s biggest money-transfer app (hint: not Venmo) is in the hot seat. When payment apps like Zelle, Venmo, and Cash App boomed during the pandemic — as people ditched germy ATMs — scammers paid attention: 18M people in the US reportedly got swindled on payment apps in 2020 alone. Now lawmakers are accusing Zelle of not taking responsibility in cases of fraud — just as the app considers expanding into retail payments. The details:

• What the Zelle: This week US senators accused Early Warning Services (EWS), the company that owns Zelle, of leaving users exposed to scams.
• How the scams work: NYT reported that thieves accessed accounts by impersonating banks, and used Zelle to siphon cash. EWS reportedly doesn’t often reimburse customers because the customers technically do authorize the transfers.

Late to the payments party… but showing up with a bang. EWS is owned by Bank of America, Capital One, Chase, PNC, Truist, US Bank, and Wells Fargo. The banks launched Zelle in 2017 to compete with PayPal-owned Venmo and other fintech rivals. Zelle has grown quickly because — unlike Venmo — it doesn’t charge instant-transfer fees and is auto-included in many bank accounts.

• Caught up: Last year Americans sent $490B with Zelle — and just $230B with runner-up Venmo.
• Still growing: WSJ reported earlier this month that some banks want Zelle to compete directly with Visa and Mastercard by getting into point-of-sale payments.