Fraud Is Flourishing on Zelle. The Banks Say It’s Not Their Problem.

Zelle, the payments platform used by millions of customers, is a popular target of scammers. But banks have been reluctant to make fraud victims whole — despite owning the system.

Justin Faunce lost $500 to a scammer impersonating a Wells Fargo official in January and hoped that the bank would reimburse him. Mr. Faunce was a longtime Wells Fargo customer and had immediately reported the scam — involving Zelle, the popular money transfer app.

But Wells Fargo said the transaction wasn’t fraudulent because Mr. Faunce had authorized it — even though he had been tricked into transferring the money.

Mr. Faunce was shocked. “It was clearly fraud,” he said. “This wasn’t my fault, so why isn’t the bank doing the right thing here?”