I was scammed by using Zelle for Ethereum Crypto online.
I was scammed by accepting Zelle for Ethereum online.
It’s not a new story, you probably hear it all the time: people sending money to a stranger online..and then receiving nothing… such as these colorful examples:
“ A Snohomish County woman fell victim to a ticket scam after sending money through a money transfer smartphone app.”
“ Scammers will offer to sell things like phones or concert tickets, and ask that the buyer use Zelle to make the payment. Considering the app’s association with major banks like Bank of America and Wells Fargo, many are willing to take the seller up on that offer, only to have the scammer vanish after funds are transferred.”
“ Scammers have taken to Zelle, the Venmo alternative backed by U.S. banks, to defraud consumers who believe the service includes the same protections they’ve come to expect from PayPal. A number of customers report having lost hundreds, or even thousands of dollars, over Zelle, when they used it for transactions with people they didn’t know — like tickets bought off a Craigslist posting, for example.” —
Yet my story is opposite, I was scammed as a seller — not as a buyer. I didn’t send money to anyone using Zelle, I received a payment and released an item.
Zelle Payments are reversible if the person who sent it says it was “fraudulent.” It is not absolute. Chargebacks are possible with Zelle.
The What & How?
Recently, I’ve been selling Ethereum online as a way to help fuel adaption of Cryptocurrency (and profit!)— Ethereum is a bit different from other cryptocurrencies such as Bitcoin and Ripple. It works on Smart Contracts and an open ledger.
I am a trader on localethereum, helping people who want to buy Ethereum and keep the spirit of decentralization as Ethereum fuels decentralized apps.
It’s been pretty fun, I’ve met some passionate people that enjoy learning about this new FinTech ecosystem, and I’ve taught people how to use MyEtherWallet, what is Gas, the idea and philosophy behind crypto, how to avoid sending to the wrong wallet, etc. Basic things that seem easy, but to someone whose new to crypto, may not understand. I fully believe in crypto being decentralized and that an exchange defeats the purpose of Ethereum.
Blockchain transactions are public. Ledger and trade information is public.
Meaning as a trader, all my transactions are public.
Public meaning they can be traced on the block chain — and being that Ethereum is unique in that it fuels and has Smart Contracts, an escrow system is inherit and built in as design. Sure, this can be done with a multi sig wallet on Bitcoin, but that’s a different story — — the power in Ethereum is in its ability of Smart Contracts. That’s why it’s so cool.
Know your Customer/KYC?
Yeah, that’s where Zelle was supposed to come in! Only people with an USA bank account can send money via Zelle. It must be supported by your bank. You can’t prepay, or load a Zelle payment — it must be funded from your bank account and you send it by logging into your bank website, pasting an email address and name and clicking submit. Since it’s through a bank, which has identified you already — it has the highest KYC and lowest risk for a transaction. Or so I thought….
How the Scam works:
Zelle is marketed online as a way to send money, up to $2500 to people by just an email address. It replaced many USA banks of sending money to external accounts — as long as you have someones’ email address they can accept a Zelle payment. The only alternative is a wire or deposit in person deposit.
In this example, I logged onto my bank and noticed two debits I didn’t authorize that co-related to two transactions — — I called my bank, and after 90 mins of phone tag, they confirmed, that someone notified their bank and stated the Zelle payments were unauthorized and my bank responded and issued a debit reversal. A Charge-back.
There is no seller protection, or notification, or anything. I had to logon to my bank and review my books to even see if there was a reversal!
The workflow of the above is pretty simple:
1: I list an offer, which someone accepts. That generates the above image — the transaction page and a chat where we go 1–1 and discuss details, e.g. how to remit payment, timetable, etc.
2: It’s pretty cut and dry — “can you pay by zelle?” “yes.” “Can you pay within xx time after funding escrow?” “yes.” “give me zelle details” “my info is: [email protected], please submit payment after escrow is funded.”
3: Then I go fund escrow, they submit payment, I see it on my ledger at my bank and I release funds.
4: Everyone’s happy, and trade completed! Or so I thought….
Recourse:
My bank says I can fight it if I provide proof that the payment was legitimate. Well, I just supplied the trade above in question — let’s see where it goes — that’d be in part two.
I know this is going to just get to be more fun because banks + crypto usually don’t mix.
As of this point, it seems anyone can submit a claim saying a Zelle transaction was not authorized, and not only get the money back, they get to keep the crypto too, or whatever they “bought.”
Misc info:
Things to keep in mind for anyone trading non-face to face crypto:
Copy/pasting complete chat conversations. Once it’s gone, it’s gone. This is the first time I had an issue — sigh.
Not just asking for screenshot proof of a payment — right click and saving it — as how else would I be able to get that? Same as above — documentation.
Only the person who has proper access, should be able to send it, right?
Also — bonus info!!!— pictures uploaded retain EXIF data. That’s really key and how I usually verify peoples location as I usually don’t do out of USA transactions. If someone says they’re in location A, but their EXIF data states a Non-USA area, I reject the transaction. This is an important feature that shouldn’t be removed.
Be careful also of sharing timestamps of images you send, as some banks use last login/timestamp to verify if you’re the account holder vs actively logging in.