It’s a tale as old as time – Plaintiff receives a voicemail from someone purporting to be an agent of her utility company requesting payment through Zelle for an overdue bill.  After being misled by the scammers, Plaintiff authorizes Zelle to transfer funds. The scammers trick her to send additional Zelle transfers.  The next day, Plaintiff learns that she transferred funds to fraudsters.  Plaintiff immediately reported the fraud to the credit union (Defendant) who refused to reimburse Plaintiff for the fraudulent transfers.  Plaintiff filed a class action and claimed the credit union:  (1)  falsely “market[ed] Zelle as a fast, safe and secure way to send money” and omitted the “huge undisclosed security risks” associated with Zelle, (2)  misrepresented and omitted “that there is virtually no recourse for consumers to recoup losses due to fraud,” and (3)  breached its contractual obligation by failing to provide reimbursement for such transactions.

In Wilkins v. Navy Federal Credit Union, No. 22-2916, 2023 WL 239976 (D.N.J. Jan. 18, 2023), a crucial issue examined by the Court was what constitutes an “unauthorized” transfer as defined by the deposit agreement.  The Defendant’s deposit agreement specifically limits its duties to “unauthorized” transactions and those resulting from the fraudulent use of a customer’s account.  In this circumstance, Plaintiff did not claim that someone “hacked, took control , or otherwise accessed her Zelle account.”  The Court reasoned that those transactions “were neither unauthorized nor the fraudulent use of her Zelle account.”  Thus, the court dismissed her claims.

The CFPB likely disagrees with this ruling.  Plus, despite this ruling, there are numerous outstanding cases alleging that peer-to-peer cash transfer platforms use misleading marketing materials and do not do enough to prevent and protect average consumers from rampant fraud schemes.  Senator Elizabeth Warren issued a report which addressed the fraud on these platforms and contends that there should be regulatory changes which expand the liability of these platforms “to cover the fraudulently induced transactions.”  You can also find material from the Zelle website which summarizes and defines financial institution’s likely responsibility for “authorized” and “unauthorized” fraudulent transactions by distinguishing between “frauds” and “scams”.

No information in this communication is intended to constitute specific legal advice.  For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at



William “Pat” Huttenbach | Shareholder | Banking Litigation
Crain Caton & James | Attorneys & Counselors
Five Houston Center | 1401 McKinney St., Suite 1700
Houston, TX 77010
Direct: 713.752.8616 | Fax: 713.658.1921 | Download Vcard

Wilkins v. Navy Federal Credit Union

Understanding Fraud & Scams