As the United States approaches a significant election, the CEO of Early Warning Services, the company that developed Zelle, has urged the public to stay vigilant. The payment processing service handled $481 million in transactions during the first half of the year. The CEO, Fowler, emphasized the need for caution, suggesting that not all information available is reliable as the election nears.
In 2021, a report by The New York Times highlighted cases where elderly Americans were deceived into making political donations during the previous election cycle. CNN recently reported that this issue persists in the current election, noting that a survey found 50 older political donors were scammed out of $6 million. According to the AARP, retirees affected by scams typically lose around $120,000, resulting in annual losses of $1 billion for financial institutions.
Despite ongoing investigations into Zelle’s co-owners, such as JPMorgan and Wells Fargo, regarding inadequate screening of fraudulent activities on the app, Fowler remains a staunch advocate for more law enforcement funding and a societal response to various scams. Fowler advised increased alertness for individuals at risk and for their families to stay vigilant.
Although Fowler refrained from disclosing specific data on election-related scams affecting elderly Zelle users, the company partnered with the National Council on Aging in May to educate older individuals about online scams. The AARP released a list of prevalent election scams during the same period, including solicitations from non-existent political action committees.
Earlier this month, CNN published research from 1,000 reports submitted to government agencies and consumer advocacy groups, which revealed that Republican fundraisers were the subject of 803 Federal Trade Commission complaints, while Democrats were the focus of 120 complaints.
The Consumer Financial Protection Bureau is also scrutinizing other Zelle co-owners, including Bank of America and Wells Fargo, to assess their effectiveness in preventing scams on the platform. Recently, Wells Fargo indicated it was contemplating legal action against the CFPB, joining JPMorgan in this consideration.
Payment processors such as Zelle, PayPal, Stripe, and Square have implemented additional security measures to encourage users to reconsider dubious transactions. Zelle, for instance, provides an alert if an unrecognized political donation is being made.
Amy Nofziger, Director of Fraud Victim Support at AARP’s Fraud Watch Network, reported that her team receives 500 daily calls from individuals over the age of 50 about various scams. According to these calls, Cash App, Venmo, and Zelle are frequently utilized by scammers. Nofziger points out that there is often confusion among users about the level of consumer protection these apps provide compared to traditional banks. She recommends using these payment apps only for transactions with familiar people.
In response to these challenges, payment processors are increasingly focusing on educational initiatives to combat scams, particularly those targeting elderly victims. PayPal was the first peer-to-peer payment platform to join AARP’s BankSafe program earlier this year, aimed at educating retirees about scam awareness. Both Stripe and Square offer resources for understanding online frauds as well.
In addition to educational efforts and software adjustments, Ben Chance, Chief Fraud Risk Manager of a payment platform, has advocated for increased law enforcement funding to address various scam threats. This stance reflects an emphasis on policy development, legal enforcement, and governmental collaboration to combat fraudulent activities effectively.
