Why Some Banks & Credit Unions Are Saying "No Thanks" to Zelle
Last Updated
January 27, 2025
Written By
Family First FCU
Starting April 1, 2025, Zelle will stop supporting its standalone app. If you want to send or receive money through Zelle, you’ll need to do it directly through your bank or credit union’s mobile app or online banking platform. Zelle says this change makes sense because most financial institutions already support their service, so the separate app isn’t really needed anymore. But, this shift raises a big question: what does this mean for the people using Zelle—and for the banks and credit unions that are expected to handle the service?
What This Means for Users and Banks
By making users rely solely on their bank’s apps, Zelle has essentially handed over all responsibility when it comes to liability for fraud and scams. And not every financial institution is thrilled about it.
Why Some Financial Institutions Are Opting Out
Zelle is super convenient—there’s no denying that. But, not every bank or credit union wants to be part of the Zelle network, including Family First Credit Union. Why? Mostly because of concerns about fraud, liability, and a lack of control over the platform.
Here are the main reasons some financial institutions, like Family First, are deciding Zelle just isn’t worth the risk.
1. Fraud Is a Big Problem
Zelle has a reputation for being a breeding ground for scams and fraud. Because payments are instant and can’t be reversed, it’s almost impossible to recover money once it’s been sent. That’s great for convenience, but not so great if you’re tricked into sending money to the wrong person.
The most common Zelle scams involve phishing (like fake emails), impersonation (someone pretending to be your friend or a company), or fake invoices and donation requests.
The problem is so severe that in December 2024, the Consumer Financial Protection Bureau (CFPB) sued Zelle’s operator and three major banks—Bank of America, Chase, and Wells Fargo—for failing to protect customers. According to the lawsuit, customers of these banks have lost over $870 million to scams since the Zelle platform launched seven years ago. Read more about the lawsuit here.
2. Who’s Responsible for Fraud? (Hint: Not Zelle)
Here’s where things get tricky. If someone hacks into your account and sends a Zelle payment, your bank is usually required to reimburse you. But if you were tricked into sending the money yourself (like falling for a scam), it’s considered an “authorized transaction.” In that case, Zelle says it’s not their problem—and often, neither is it your bank’s.
This leaves financial institutions in a tough spot. Even if they’re not technically required to cover losses from scams, they still have to deal with angry customers. For smaller banks and credit unions, these losses can be devastating.
3. Lack of Control
Zelle is owned by Early Warning Services, which is a group of big banks. Smaller financial institutions that join Zelle don’t have much say in how the platform operates or what protections are in place for their customers.
For a lot of smaller banks and credit unions, this lack of control is a dealbreaker. They don’t want to be stuck cleaning up messes caused by policies they didn’t help create.
So, What’s Next?
Zelle’s decision to move entirely to financial institutions’ apps makes sense from a convenience standpoint, but it’s created some real headaches for the banks and credit unions expected to handle the risks.
For customers, this shift means being extra careful when using Zelle. Double-check who you’re sending money to, and don’t fall for anything that seems even slightly suspicious. If you currently use Zelle, we encourage you to explore other safe and reliable payment options. Remember these important tips for any P2P payment service:
- Only send money to people you trust
- Always verify recipient information before sending
- Be cautious of unexpected payment requests or offers
For financial institutions, deciding whether to partner with Zelle is a balancing act: offering customers a popular service versus taking on the risks that come with it.
At Family First Credit Union, your security and financial wellbeing is our top priority. If you have questions about secure payment options or need assistance, don’t hesitate to reach out to us. Thank you for being a valued member of Family First Credit Union.