Wells Fargo customer loses thousands in Zelle scam despite new refund policy

SAN FRANCISCO (KGO) -- Scams have flourished on the popular Zelle quick pay app over the past two years. In response, Zelle pledged to tighten security -- and even reimburse customers who fall victim to so-called imposter scams.

Some call it a good first step. But it didn't help a Bay Area woman who lost thousands of dollars.

"When all my money was gone, all of a sudden the phone went dead. And I went, 'Oh my God.'"

Eileen Loughran of San Francisco was still in disbelief.

MORE: Warning: Chances are that's not really your bank on the phone. It's likely a fake caller ID scam

"I'm like everything, the text message, everything seemed totally legit," she said.

She was sure a text really was from Wells Fargo, asking if she'd just sent $957 with Zelle.

"And so I texted 'no' - and then it said someone will be getting back to you and then my phone rang -- 'Wells Fargo fraud alert,'" she said.

A man on the phone even gave a real bank employee's name. He said someone kept charging her debit card.

"'We have to cancel your card and whoop, here comes another charge for $500.' It seemed real because this is your money," Loughran said.

MORE: Fake customer service phone numbers connect consumers to scammers

The man told her to quickly transfer money back into her account through the Zelle app in her account -- which Loughran had never used before.

"I'm like, 'Wait, why would I counteract that with a transfer?' He's like, 'Ma'am, ma'am, it's getting reinstated,'" she said.

He persuaded her to make eight transfers totaling $3,500 -- the daily limit for Zelle transfers.

"All of a sudden the phone went dead. I called back, no one answered," Loughran said.

She contacted the real Wells Fargo.

MORE: Victim of a Zelle imposter scam? You could be getting a refund soon

"'They said you've totally been scammed," she said.

The same scam hit thousands across the country.

Zelle offers no fraud protections and the law is unclear on peer to peer apps. Federal law requires refunds for unauthorized money transfers, but banks say these victims did authorize the transfers, even if it was a scam.

Senator Elizabeth Warren (D - Mass.) called a hearing with bank CEOs who own Zelle. She asked if they would refund defrauded customers. "Last year alone, Zelle users were defrauded out of half a billion dollars that we know of," she said.

"A show of hands. Who is willing to make that commitment to their customers?" Sen. Warren asked the CEOs, who did not raise their hands.

MORE: Wells Fargo bankers tell East Bay customer they're too busy to stop wire scam

As for Loughran? She made claims for each of the eight transactions. Weeks later, she received 16 letters -- half said the claims were open, the other half said they were closed.

Wells Fargo said she authorized the transactions, telling 7 On Your Side: "When a customer reports they've fallen victim, we do a comprehensive investigation using the same Zelle rules, laws and regulatory guidance as other banks."

"Besides being angry, I mean, it really hurts," Loughran said.

Zelle has pledged to refund customers who fall victim to "certain imposter scams" -- but the rules are vague. Zelle says it doesn't want to tip off potential fraudsters who could make fake refund claims.

Take a look at more stories and videos by 7 On Your Side.

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