JPMorgan Chase Bank (Chase) will soon start blocking Zelle payments to social media contacts to combat a significant rise in online scams utilizing the service for fraud.
Zelle is a highly popular digital payments network that allows users to transfer money quickly and securely between bank accounts. It is also integrated into the mobile apps of many banks in the United States, allowing for almost instant transfers without requiring cash or checks but lacking one crucial feature: purchase protection.
In a recent update to its user policy, Chase explained that the payments service should not be used to buy goods from retailers or merchants, “including on or through social media or social media marketplaces or messaging apps.”
According to scam reports from Chase customers who filed Zelle or wire transfer claims between June and December 2024, almost 50% of all reported scams originated on social media.
In response to these worrying statistics, the bank added that starting March 23, it would begin delaying, declining, or blocking Zelle payments to accounts if they were identified as originating from social media contact.
“For your protection, Chase will not allow you to send Zelle payments identified as originating from contact through social media. We’ll decline those transactions because Zelle is meant to pay friends, family and other trusted recipients you know, not for others you meet on social media,” the bank warned.
“We may request information from you (for example, when you set up a payment or add a recipient) regarding your purpose of payment, the method of contact with your recipient, or other details we deem appropriate to assess whether your payment has elevated fraud or scam risk, or is an illegal, ineligible or improper payment.”
Change likely prompted by CFPB lawsuit
While Chase didn’t share what exactly prompted this decision, the U.S. Consumer Financial Protection Bureau (CFPB) sued Early Warning Services (Zelle’s operator) and three of its owner banks (Bank of America, JPMorgan Chase, and Wells Fargo) in December for rushing the service into the market to compete with other payments platforms like Venmo and CashApp and failing to implement adequate consumer safeguards.
According to CFPB’s lawsuit, this resulted in hundreds of thousands of Zelle and bank customers losing over $870 million since the payment service was launched.
The affected consumers were also denied assistance and told to contact the scammers to recover their money, while the banks failed to investigate their complaints and provide them with legally required reimbursement for errors and fraud.
“The nation’s largest banks felt threatened by competing payment apps, so they rushed to put out Zelle,” said CFPB Director Rohit Chopra. “By their failing to put in place proper safeguards, Zelle became a gold mine for fraudsters, while often leaving victims to fend for themselves.”
Chase is the U.S. consumer and commercial banking business of JPMorgan Chase, and it provides banking services to millions of Americans at more than 4,700 branches and 15,000 ATMs nationwide.