DTE impersonators drained Rochester Hills woman's checking account using Zelle app

The Rochester Hills woman was absolutely thrilled when she opened the letter from the Bank of America. Her nightmare of being scammed by those horrible DTE impersonators appeared to be over.

The letter, which arrived in late June, gave her hope that she might recover the money she lost to the utility shut-off scam in late April. 

"I was like, 'Oh, my God. Oh, my God,'" she told me, thinking things had turned in her favor.

"Your claim has been resolved," the bank proclaimed in its bold greeting. 

"We're happy to tell you that we've credited your account for $1,324.85. We appreciate your patience and are happy we could resolve this in your favor," the letter stated.

It was all there in black and white. All there, except the green.

Will she or won't she recover the cash? 

When she went online to look at her bank account, she couldn't spot an extra $1,324.85 in her checking account. Worse yet, a bank representative later told her that the letter was sent in error. No money would be showing up — ever. 

That phone conversation with the bank lasted nearly an hour, the woman said, as she tried to get the representative on the phone — who was very polite — to explain how in the world the bank could send a letter one day saying they're fixing the problem, then never fix it and claim they aren't required to do so. 

A mistake? Oh, nevermind? You won't get more than a thousand dollars back after all? 

"And I lost it," she told me frantically by phone. "I said, 'Do you know what you've just done to me?'" 

All the shame, all the self-doubt, all the embarrassment, all the frustration of the scam, all back to torment her once again.

More:Fake Caller ID in utility shut-off scam cost Troy woman $700 via Zelle

More:Don't lose cash on money apps, digital wallets: How to protect yourself

More:When is it time to hang up on scam call? Clues, common phrases to listen for

More:2 Michigan women tricked by convincing, sophisticated Amazon scam: What to know

The woman, who is 61, asked that her name not be used because she doesn't want her children to know that she was scammed by crooks who figured out a way to use a money transfer app called Zelle to pretty much drain her checking account. 

Scammers love money apps, as much as gift cards

Her story is far from unique, even though the part involving the bank's letter is a doozy.

The scammers are out in full force, taking advantage of quirks in digital banking, mobile apps and peer-to-peer payment services often highlighted online by your own bank. 

The Zelle thing is huge and crooks are using it — and the banking system — to their advantage.

Nearly 18 million people have been hit by "widespread fraud" on money transfer apps, according to a letter sent in late April to Zelle's network operator Early Warning Services by Democratic U.S. Sens. Elizabeth Warren of Massachusetts, Robert Menendez of New Jersey and Jack Reed of Rhode Island. 

"Zelle’s biggest draw — the immediacy of its transfers — also makes scams more effective and 'a favorite of fraudsters,' as consumers have no option to cancel a transaction even moments after authorizing it," the letter stated. 

What is Zelle? 

About 1.8 billion payments — totaling $490 billion — were sent by consumers and businesses through the Zelle Network in 2021, according to the Early Warning Services. Total dollars transferred were up 59% from 2020.

Early Warning Services, which operates Zelle, is owned by seven big banks — Bank of America, Capital One, Chase, PNC Bank, Truist, U.S. Bank and Wells Fargo.

Zelle is found easily on thousands of banking apps for a wide variety of banks and credit unions across the country. Or you download the Zelle app on your own. You send money to another person's bank account if you have their email or cellphone number. 

Bank of America highlights Zelle online as a way to "send and receive money with almost anyone in minutes, no matter where they bank." 

At the same time, though, Zelle and others say money transfer apps should only be used to send and receive money with people you know and trust, not strangers. The same is true of gift cards, too, which are also used by scammers. 

Zelle "doesn’t offer a protection program for authorized payments," according to Early Warning Services.

"Money moves fast — directly into the enrolled recipient’s bank account. Always double check the recipient’s correct U.S. mobile number or email address, so the money goes to the right person," according to Early Warning Services.

What are the hot scams? 

Crooks are using Zelle and other apps to rob consumers when listing fake puppies to sell, advertising phony apartments or homes to rent, offering extra income from wrapping your car in an ad and even texting consumers and pretending to be their bank.

DTE had received reports of 58 scam cases through late June where customers confirmed they had paid a scammer or provided sensitive information, according to Katie Susko, a spokeswoman for DTE.

So far in 2022, Susko said, 95% of the shut-off scams requested payment through Zelle. 

The latest DTE-related scam involves crooks, posing as DTE Energy, initially contacting customers via text message, then by phone call and asking them to make missed payments via a website. 

DTE Energy said it will never contact customers through text messaging. If you are unsure about a caller claiming to be a DTE employee, the utility recommends hanging up and calling customer service line at 800-477-4747.

One new scam: A prospective buyer supposedly wants to buy an item you listed on Facebook Marketplace but then claims that you "need”  to upgrade your Zelle or another digital wallet app to accept money from their "business account" for the big-ticket purchase to go through, according to a June alert by the Better Business Bureau. 

The scammer supposedly puts up $300 and sends you screenshots of his Zelle app as proof. Then, the scammer pressures you into paying him back.

But the BBB warns: If you refund the fake buyer, you’ll be out a few hundred dollars. No money was spent on an upgrade. And you won't receive any money for selling the item. 

"Scammers go where it's easy to get the money. Zelle is their current mechanism to drain consumer accounts," warned Ed Mierzwinski, PIRG Education Fund’s senior director of federal consumer programs.

"The scammers are taking advantage of consumers because the banks are letting them," Mierzwinski said, who says tougher consumer protection laws are needed. 

"My basic advice is don't use these apps," Mierzwinski said.

If you do use them, PIRG suggests, that if possible, keep one separate bank account to link to peer-to-peer accounts. Don't link a money transfer app to your bank account with the biggest balance.

Avoid engaging with those who contact you out of the blue and suggest that you can pay a utility bill or anything else via Zelle or another peer-to-peer app. 

Not surprisingly, the top payment method used by scammers to obtain money in 2021, in terms of reported dollars lost, was by “bank transfer or payment," according to data from the Federal Trade Commission Consumer Sentinel Network. Cryptocurrency was a very close second. 

Very tough for many to get money back when scammed

Will you get your money back if you're scammed? Many times, the best way currently is to put up a fight — and even that might not work. 

You should contact your bank or credit union immediately if a fraudster takes money from your account. Even if you were the one who was scammed into sending the money, contact your bank or credit union immediately and insist that they investigate and try to get the money back from the scammer’s bank.

If you've been scammed with Zelle and your bank refuses to return your money, file a complaint with the Consumer Financial Protection Bureau, which forwards complaints to financial institutions to respond. See www.consumerfinance.gov/complaint. Consumers also can call the CFPB at 855-411-2372.

Mierzwinski also suggests filing a complaint with the Office of the Comptroller of the Currency or www.occ.gov.

You also can report a scam to the Federal Trade Commission at ReportFraud.ftc.gov. And you can report the fraud to the state attorney general. In Michigan, go to www.michigan.gov/ag/complaints.

What happened with the bank's letter? 

The woman who lost money to the DTE scam said the Bank of America letter arrived unexpectedly in her afternoon mail on a Wednesday. 

When she didn't see the money online, she called the bank first thing the next morning. The woman then called me at 9:41 a.m. to share her frustration. We missed each other and she left a message.

I called back and we talked. After we hung up, I left a voicemail and sent an email to a Bank of America media contact around 2:12 p.m. and included the woman's claim number from her letter. 

By 3:49 p.m., the woman was calling me all happy now because all of a sudden the $1,324.85 was showing up as pending in her Bank of America account. 

"I'm absolutely shocked," she said. "I'm stunned." 

The woman admitted to me later that when she was talking with the bank representative she did tell them that she was going to call the Detroit Free Press. Well, she did. 

A Bank of America spokesperson declined to address questions about the customer. 

The bank only issued a statement beginning: "It’s unfortunate when people fall for scams like this and send money to scammers posing as a legitimate business."

The bank said customers are warned during a Zelle transaction if they are sending money to a new recipient to only send money to people they know and trust and never to transfer money as a result of an unexpected call or text.

To help customers avoid scams, the bank has information on its website. Tips include: "Beware of scammers impersonating banks and fraud departments." 

"In cases like this, we attempt to get the money back from the recipient bank; however, there is no guarantee since the customer has authorized the payment," according to the bank's statement. 

Why would a bank send the woman a letter and then claim it was a mistake? 

PIRG's Mierzwinski speculated that perhaps one junior level bank employee researched the rules and interpreted regulations one way and then a senior level attorney disagreed but only did so long after the letter was sent out.

Mierzwinski said he's heard of cases where banks took care of consumer complaints after the issue was reported to local consumer reports at newspapers or TV stations.

It's not typical, consumer watchdogs say, to hear of a bank sending a letter to offer the recovery of money and then saying it was a mistake. 

"The banks are generally doubling down and claiming it's not our fault," he told me. 

"The bank is telling consumers that it's your fault."

Watchdogs want more breaks for consumers

Consumers are caught in a mess because regulations apparently have not kept up with changing technology. Many say more consumer protection is needed.

"Clearly, the warnings provided by the payment apps themselves to beware of scams are not adequate to protect consumers from the losses," according to a report submitted by consumer groups April 28 before the House Financial Services Taskforce on Financial Technology. 

Regulation E — a federal banking rule that's meant to protect banking customers who use electronic methods to transfer money — was enacted in 1978, long before we had mobile phones, online banking and payment apps. The regulation implements the Electronic Fund Transfer Act. 

"Regulation E’s protection against unauthorized transfers will likely not apply when the consumer is fraudulently induced to make a payment, even if the consumer’s authorization was obtained through fraud," according to a statement written by written by Lauren Saunders and Carla Sanchez-Adams at the National Consumer Law Center. 

"Zelle is a very dangerous payment system," Saunders told me in interview by phone.

"These scams happen in a lot of ways and the legal rights are tricky," she said.

If you're persuaded to send money, Saunders said, you're probably not protected, as it's viewed as an authorized transaction. But if hackers steal money out of your account, she said, it's clear that you're protected, even if you got tricked into giving them information needed to get into your account. 

An argument is being made by consumer advocates that the fraudster in many cases is actually initiating the transfer of money.

The crooks might already have the consumer’s online banking username and password, and mobile phone number.

The fraudster uses the consumer’s online banking username and password to begin the account-logon process.

But the fraudster needs more information and tricks the consumer into handing over the authentication code that the consumer’s bank just texted to the consumer. The fraudster enters that code into the consumer’s bank’s online banking portal. And the fraudster is now logged into the portal as the consumer. The Consumer Financial Protection Bureau recently clarified, Saunders said, that consumers still have rights in that situation.

Never give over such a code to a stranger, even if you believe you're talking with a trusted source. 

Mierzwinski called the issue a loophole in the law and noted last year that the watchdog group planned to lobby Congress to fix that problem. The law hasn't change yet. 

In December 2021, the Consumer Financial Protection Bureau issued new FAQs and clarified that Regulation E protects victims who are induced into turning over their account credentials to scammers, who conduct unauthorized transfers.

Saunders noted that CFPB's FAQs only addresses the situation where you are induced into giving the crook your account credentials, not where you are induced into transferring the money.

She said banks and Zelle are responsible for unauthorized transfers that the scammers initiate, but not for ones in which consumers are defrauded into sending money.

"Given this regulatory landscape, your company and the banks have a clear responsibility to more aggressively protect consumers," according to the letter Warren and other Democrats sent to Zelle’s parent company, criticizing it for not doing enough to combat fraud.

A bank would need to conduct an investigation to determine whether a fraudster induced the transaction. 

"When a consumer provides notice to a financial institution that money was stolen from the consumer’s account, the burden is on the institution to show that the transfer of funds out of the consumer’s account was authorized by the consumer," according to a CFPB spokesperson. 

Consumers, of course, experience a great deal of confusion when they are scammed and have no idea how crooks are accessing the money. 

"The banks appear to be gaming the lack of clarity to deny consumer claims," Mierzwinski said. 

A fake collection call makes a migraine worse

Consumers must move cautiously to protect their money. Look out for signs of fake collection calls.

The Rochester Hills woman originally reached out to me in May when I wrote about consumers who lost money to crooks who were impersonating DTE Energy.

She saw herself in that column when she reading that a Troy woman paid $700 via the mobile wallet Zelle to scammers claiming to be from DTE and an Allen Park consumer lost $376.96 via the Zelle app to a similar DTE scam.

The Rochester Hills woman was dealing with a bad migraine when she received the fake DTE call in April. She thought she's was paid up on her bills. But the caller ID said DTE. The real DTE number showed up.

The man pretending to be from DTE claimed she owed $232. He sounded helpful, giving the impression that we could get this cleared up right away. 

She wanted to pay by credit card but the scammer told her to use Zelle. 

"I never used Zelle. I don't know anything about it," said the woman, who works for a major automaker. But the app was there at the bank site. 

"Once I opened it, it was ready to go," she said. 

Somehow, the crooks figured out a way to ultimately get most of her money in her checking account. They left her with $7 in checking.

When this first happened, she contacted DTE and Bank of America. But she said she was told by Bank of America back in April after she visited a branch that she authorized this payment so it was not fraud. 

"After I got home from the bank, I cried and cried," she told me.

And then she got upset all over again when the bank representative on the phone told her in June that that letter was all a mistake. 

"I am beyond happy," she said about getting the money. "What a roller coaster of emotions these last 24 hours." 

She is still very upset with her bank — and says she intends to close her account. 

ContactSusan Tompor via stompor@freepress.com. Follow her on Twitter@tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.