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Zelle, a payments app that works with more than 2,100 financial institutions, recently confirmed it will reimburse some customers, including small businesses, who fall victim to scams. The app, which was launched in 2017, processed 2.3 billion payments with a total value of $629 billion last year.

Since June 30, Zelle operator Early Warning Services -- a Scottsdale, Arizona-based company owned by seven banks including Capital One, PNC, and Bank of America -- has quietly required banks and credit unions to reverse transfers for customers in qualifying cases when they were tricked into sending money to scammers impersonating banks.

Banks are required to reverse fraudulent charges that were not initiated by a customer. Zelle's program is unique in that it also covers transactions initiated by the customer. The measure comes as Zelle has drawn scrutiny from lawmakers for the amount of fraud perpetrated on its platform -- reportedly $440 million in 2021 alone. (Zelle has said more than 99.9 percent of transactions on its platform are sent without reports of a fraud or scam.)

Ben Chance, chief fraud risk officer at EWS, told Reuters the move was "well above existing legal and regulatory requirements."

In an August 30 press release on its website, EMS simply stated that banks in its network must implement Zelle's risk-reduction program and that "the network has a new consumer reimbursement benefit for specific scam types." A Zelle spokesperson told Reuters that the app had not publicized the new policy, which only applies to specific types of scams, because it does not want to encourage more illegal behavior.

According to the Federal Trade Commission, in 2022, Americans lost $2.6 billion to imposter scams, in which a fraudster impersonates a government agency, business, or employer and asks for money from a victim. Small businesses are often targeted with scams related to false invoices or tricked into applying for government programs that turn out to be fake.

Zelle has become increasingly popular with small-business owners, many of whom use the service to pay employees or rent. According to a Zelle press release, small businesses received more than 150 million payments with Zelle, totaling more than $72 billion, in 2022.