Sending and receiving money in the United States was never so easy until Zelle arrived. Just one number and seconds later you have a transfer in your bank account. We’ve all used Zelle and we all know how it works, which is why the latest news about this company has left us all perplexed. This app has been on everyone’s lips after the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against three major entities: Bank of America, JPMorgan, and Wells Fargo (which was later dismissed) for violating certain regulations. However, Zelle believed that lawsuit was unfounded, and they decided to issue a statement to improve their image. The reality is that there are some transactions and transfers that can trigger all the alerts and cause your accounts to be investigated and even permanently blocked. We’ll tell you everything you need to know.
What is Zelle?
Zelle is an instant payment platform that allows you to send and receive money instantly. It’s an extension that’s integrated into most banks, but it doesn’t offer fraud protection, so if you send money by mistake or fall for a scam, there’s no way to recover it.
Zelle’s defence
Following the withdrawal of the lawsuit against it, Zelle welcomed the CFPB’s decision and reaffirmed that the case lacked legal and factual basis. The platform insists on its commitment to providing a secure service to its 151 million users and highlights its anti-fraud policies, which include potential sanctions or suspensions to ensure compliance with banking regulations.
What problems can Zelle cause?
Zelle was designed to send money to friends and family, but many people use it to pay for goods or services without realizing that this can be a problem. Banks monitor these transfers and, if they see anything suspicious, they can take drastic measures. Therefore, a list of activities that violate the Zelle service is established, and money related to them should not be requested, sent, or received:
- Medicines and controlled substances
- Illegal and similar drugs
- Firearms, ammunition, and other weapons
- Materials or activities with sexually explicit content
- Pornography and obscene or offensive content
- Materials that promote violence, hatred, or intolerance
- Fraudulent financial schemes such as Ponzi or pyramid schemes
- Unauthorized gambling, gambling, lotteries, or sweepstakes
- Judicial payments such as alimony or child support
- Transactions involving travellers’ checks, money orders, stocks, annuities, or cryptocurrencies
- Counterfeit or pirated products
- Copyright, trademark, or intellectual property infringement
- Financing of terrorist activities
- Fraud, scams, and money laundering
- Any illicit activity or illegal use of the service
Naturally, failure to comply with these rules may result in account suspension, internal investigations, and, in some cases, notification to the relevant authorities.
Other penalties:
Zelle warns that failure to comply with its regulations may result in additional investigations by partner banks and, in serious cases, even legal action.
It also advises avoiding using Zelle for purchases from strangers or unauthorized commercial transactions, as it does not offer buyer protection in the event of fraud.
Why do banks block accounts for using Zelle?
Banks are required to monitor transactions to prevent fraud, money laundering, and illegal activities. Because Zelle allows instant transfers without buyer protection, it has become a target for scammers. If a bank notices irregular transactions, it can:
- Investigate your account to ensure you’re not violating its terms of service.
- Temporarily block your access to Zelle while analysing the money movement.
- Permanently close your account if it deems it to be a financial or legal risk.
What to do if your account is blocked by Zelle?
If your account has been suspended or closed, the first thing you should do is contact your bank. Depending on the reason, they may ask for:
- Identity verification. They may only need to confirm that the transactions are yours.
- Explanation of certain transfers. If you received or sent suspicious money, you may need to justify it.
- In some cases, if the bank believes there was serious misuse, there may be no way back.