Posted In:

Payments, Fraud, Banking

Zelle-lous Fraud


Oct 16, 2023


Sarah Parsons Wolter

Posted In:

Payments, Fraud, Banking


Oct 16, 2023


Sarah Parsons Wolter


In the age of instant transactions and seamless P2P payments, fraud has been proliferating across platforms like Venmo and Zelle. Hundreds of billions of dollars get sent every year through each of these services, and customer value propositions of fast, convenient and free have sometimes made them prone to fraudster activity.

The Zelle fraud pool case, as reported by Business Insider, is a prime example of this activity. In this case, clients of a contracted swimming pool construction project sent over $31,000 to a fraudster’s Zelle account in increments between $3,500 and $5,000 for two weeks, due to daily transfer limits. This elaborate scam was possible because the only identification of the recipients were email addresses, and the pool contractor’s email was hacked.

Once scammed, recourse for instant transaction fraud victims are limited. On the fraudster’s side, these funds were likely immediately passed from account to account to increase difficulty of traceability, and anonymized in the process. On the bank’s side, they do not bear responsibility on behalf of Zelle, and many victims (including the pool owners) do not get their money back.

To complicate things even further, the evolution of deep fake AIs can make proving identities that much more difficult. In this year’s Fat Bear Week in Alaska, a first-time champion Grazer was crowned for her aggressive defense of her cubs as evidenced through live streams. But in the new age of AI generated footage, how can we be sure this footage is her? Or her cubs? Or how fat she is?

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Portfolio News

Fondeadora joins Google Wallet - Sociedad Financiera Popular (Sofipo) Fondeadora announced that it will integrate as a payment method to Google's digital wallet by enabling its debit accounts in the application. With the integration, the firm enables its users to pay through their phone, as well as contactless payments, depending on the device. Read more

Flutterwave partners with Microsoft to advance digital payments in Africa - Since its inception, Flutterwave has advanced the democratization of payments in Africa, enabling multiple modes like cards and mobile wallets. By partnering with Microsoft, it aims to revolutionize business payments across the continent further. Flutterwave’s mission aligns with Microsoft’s priority of digitally empowering African SMEs. Read more

Mauve becomes first non-custodial exchange to receive a Cayman VASP license - The Cayman Islands Monetary Authority has for the first time granted a virtual asset service provider (VASP) license to a decentralized exchange. Mauve, a non-custodial exchange for trading real world assets, such as stablecoins or fixed income, went live in September. Additionally, more trading pairs will launch in the upcoming months with a focus on supporting issuers of tokenized real-world assets like treasury bills, credit, and bonds. Read more

Fiserv forges data-sharing partnership with Plaid - The collaboration lets customers of Fiserv-hosted banks and credit unions connect to the more than 8,000 applications and services on the Plaid network via “secure and reliable data sharing through application programming interfaces (APIs),” the companies said this week. Read more

Zelle-lous Fraud

The great Zelle pool scam - All I wanted was a status symbol. What I got was a $31,000 lesson in the downside of payment apps. The point here isn't that Zelle is worse than all the other places that invented this fun, frictionless way to accidentally transfer your net worth to someone else you were supposedly told to pay. It's just that Zelle is bigger. And that nobody — not the banks, not the police, not the Feds — feels it's their job to go after the criminals when it happens. Read more

Fraud is flourishing on Zelle. The banks say it’s not their problem - Zelle, the payments platform used by millions of customers, is a popular target of scammers. But banks have been reluctant to make fraud victims whole — despite owning the system. Read more

Gutsy mother wins Fat Bear Week in Alaska - After a tournament filled with upsets and old favorites being swept aside for new stars, Fat Bear Week has ended with the crowning of a first-time champion. Grazer, a notoriously aggressive mother bear with light brown fur and blonde ears, beat a massive male named Chunk to become only the third female winner of the contest. Read more

Industry News

Can AI fix Wall Street’s ‘spaghetti code’ crisis? Microsoft and IBM are betting that it can - There aren’t a lot of businesses built around tape cassettes or floppy disks, so a lack of experts who can repair those decades-old technologies is rarely a problem. That’s not the case with Cobol—a 64-year-old programming language that Wall Street and the federal government rely on to process tens of trillions of dollars worth of transactions annually. As Cobol gets older, those massive organizations have been hard-pressed to find people who can update their ancient systems. Read more

JPMorgan debuts blockchain collateral settlement in BlackRock-Barclays trade - JPMorgan’s Tokenized Collateral Network, or TCN, was used by BlackRock to turn shares in one of its money market funds into digital tokens, which were then transferred to Barclays as collateral for an over-the-counter derivatives trade between the two institutions. Read more

Broadridge Financial’s proxy ‘monopoly’ faces challenge from start-ups - Start-up companies are moving to seize a slice of the lucrative business of distributing shareholder voting materials from Broadridge Financial Solutions, which for years has dominated the market in the US. New entrants are attempting to challenge its heft, hoping to exploit new technology and heightened interest in shareholder voting from small, retail investors. Read more

Goldman strikes deal to sell GreenSky unit to Sixth Street Group - Goldman is offloading the lending platform less than two years after acquiring it as part of a broader retreat from the mass market. The Wall Street giant’s foray into consumer lending proved costlier than expected, and the company said it pushed too quickly into the effort, contributing to missteps. Read more

California passes law mandating VC firms to release investments’ diversity information - This week, California Governor Gavin Newsom signed into law Senate Bill 54, which will require venture capital firms in the state to annually report the diversity of the founders they are backing. This is the United States’ first piece of legislation that aims to increase diversity within the venture capital landscape; and the law will go into effect on March 1, 2025. Read more

Klarna takes aim at Google and Amazon with AI image recognition tool for shopping - The feature, which Klarna rolled out Wednesday, will enable users to point their phone at an item of clothing or an electronics product and find results for similar items directly within the Klarna app. The tool is trained on data from PriceRunner, a price comparison service Klarna acquired for close to $1b. Read more

Citigroup to sell China consumer wealth business to HSBC - The deal covers total deposits and investment AUMs of about $3.6b, and is expected to close in the first half of 2024. Citi first announced its plan to exit China consumer banking in April 2021 as part of a global strategy revamp. The consumer banking business mainly served rich clients with deposit, fund and structured product offerings. Read more

New clues suggest stolen FTX funds went to Russia-linked money launderers - Whoever looted FTX on the day of its bankruptcy has now moved the stolen money through a long string of intermediaries—and eventually some that look Russian in origin. Read more

Select Financings

Account Labs - Singapore based crypto wallet provider raised $7.7m in new funding led by Amber Group. Read more

Alpaca - California based startup providing stock and crypto brokerage via API raised $15m in new funding led by SBI Group. Read more

Canopy Servicing - New York based loan management platform raised $15.2m in Series A funding led by Foundation and Infinity Ventures. Read more

Cardata - Boston based provider of mileage reimbursement software raised $100m in growth funding led by Wavecrest Growth Partners. Read more

Carefull - New York based platform to help banks protect older customers from fraud raised $16.5m in Series A funding led by Fin Capital. Read more

CrossFund - Singapore based equity marketplace raised $1.5m in new funding led by BlockBase Ventures. Read more

Ergo - New York based automated pricing platform for Shopify merchants raised $1.5m in pre-Seed funding led by Anthemis. Read more

Fantix - New York based privacy safe AI startup raised $1.6m in pre-Seed funding led by Gaingels. Read more

InsuranceDekho - India based insurance company raised $60m in new funding led by Mitsubishi UFJ Financial Group. Read more

Investree - Indonesia based P2P lender raised €220m in Series D funding led by JTA International. Read more

Kennek - London based lending infrastructure provider raised $12.5m in Seed funding led by HV Capital. Read more

Lopay - London based instant payments startup raised £6m in Seed funding led by BackedVC. Read more

Matic - Ohio based embedded insurtech company raised $17m in Series B funding led by IA Capital Group. Read more

Membrane Labs - New York based cryptocurrency-focused trading and lending platform raised $20m in Series A funding led by Brevan Howard. Read more

Neutral - New York based carbon credits blockchain company raised $3.2m in new funding led by North Island Ventures. Read more

Onsurity - India based SME insurer raised $24m in Series B funding led by the IFC. Read more

Orus - France based professional insurtech company raised €11m in Series A funding led by Notion Capital. Read more

Ostium Labs - Chicago based web3 platform designed to bring commodity markets on-chain raised $3.5m in new funding led by General Catalyst and LocalGlobe. Read more

Parsec - New York based insights provider into on-chain markets raised $4m in new funding led by Galaxy. Read more

Propify - Boston based property management software company raised $3.3m in Seed funding led by Prudence. Read more

TransactionLink - Berlin based KYC/KYB automation startup raised €5m in Seed funding led by White Star Capital. Read more

Untangled Finance - London based startup bringing private credit onto the blockchain raised $13.5m in new funding led by Fasanara Capital. Read more

Upvest - Berlin based digital wealth management infrastructure provider raised €30 million in new funding led by BlackRock. Read more

Zest Equity - UAE based company digitizing private market transactions raised $3.8m in Seed funding led by Middle East Venture Partners. Read more


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