Couple Falls Victim To $31,000 Pool Scam on Zelle

One couple in Massachusetts who were hoping to build the pool of their dreams found themselves victims of an online scam perpetrated by parties that still remain unknown. Devin Friedman reported the pool scam to Business Insider. He said initially he envisioned transforming his backyard into a backyard oasis with a beautiful swimming pool. However, the journey took an unexpected and distressing turn that ultimately wound up costing him substantially.

The tale started back in April 2020, with the Friedmans signed a pool construction contract with Gary Kruglitz, the purported owner of Royal Palace Pools and Spas. Pandemic-induced delays and then freezing ground in the off-season halted their plans. When construction activities resumed in 2021, Friedman began calling Kruglitz to request to be first in line once the ground thawed. Kruglitz said he’d try, and Friedman took that as a promise.

Calls in April and May went unreturned. The Friedmans were anxious. They let their feelings be known, about how they were promised to be first in line to build a pool in the spring and could no longer get ahold of Kruglitz. Expressing their discontent via email, the Friedmans finally received a response on July 5, with Kruglitz stating that he was finally ready to begin construction of their swimming pool. The catch? A payment exceeding $30,000 would be needed to start construction, as stipulated in their contract. Navigating closed bank branches due to COVID-19, Kruglitz suggested Zelle for transactions, advising incremental transfers due to daily limits.

Submitting to this guidance and eager to get their pool project underway, the Friedmans Zelled $3,500 on the 6th, $3,500 on the 7th, $5,000 on the 8th, and another $5,000 on the 9th. As money was being paid, Kruglitz’s responsiveness increased. They asked if he had all the materials needed to build the pool. Yes, mostly, was his reply. They asked if he could begin construction the following week. He replied that he could. The emails were strange but the Friedmans overlooked that, and simply thought Kruglitz’s use of bad grammar and short replies was normal for tradesmen.

Hesistant after making so many large payments eventually the Friedmans requested a receipt for the $23,000 sent, and received what appeared to be a legitimate invoice from Royal Palace Pools and Spas.

July 13, the anticipated start date, arrived with hope. An email from Kruglitz claimed he and his crew were en route early in the morning. Hours passed, but no construction crew appeared. Concerned, the Friedmans called Royal Palace Pools and Spas, leaving messages for Kruglitz to return their calls.

When Kruglitz finally returned their call, he appeared confused. He claimed that he hadn’t received an email from the Friedmans in weeks. Storming into his office, the Friedmans pressed him for answers until a simple yet probing question left them defeated: “What’s a Zelle?”, asked Kruglitz. The revelation finally dawned that he never emailed them or instructed them to transfer funds to him directly; instead, they had unknowingly sent $30,500 to strangers.

How It Happened

The lingering question: How did this pool scam happen? According to cyber-intelligence expert Evan Kohlmann, Kruglitz’s email likely fell prey to phishing or the purchase of hacked credentials on the dark web. The scammers, infiltrating Kruglitz’s correspondence, orchestrated fraudulent transactions.

The mechanics of the scam unfolded in a sinister fashion. Hackers targeted Kruglitz, and possibly acquired his email password through hacking, phishing, or possibly just purchasing it outright on the dark web. Once inside Kruglitz’s email, they perused customer correspondence, gaining insight into owed amounts and the perfect opportunity to request funds.

Friedman confessed that the eagerness to realize their pool dreams led them into a trap. When Kruglitz instructed them to “Zelle him,” to two email addresses —sunshineyasmin48@gmail.com and personalbreezy@gmail.com. The Friedmans, unwittingly blinded by enthusiasm, complied without questioning the unusual directive.

The Friedmans were unfamiliar with—Zelle. A peer-to-peer (P2P) app that allows instantaneous money transfers between individuals who may only know each other by a cellphone number or an email address.

To distance themselves from the scam, the scammers enlisted intermediaries—unwitting participants in various scams. These go-betweens acted as conduits for the money. The funds, in all likelihood, were converted into cryptocurrency or gift cards before being resold on the dark web at a discount for cryptocurrency.

Senator Elizabeth Warren, often at odds with the financial industry, has been urging scrutiny into Zelle due to the prevalence of fraud. Last year, US Bank, a member of the consortium, reported a staggering 45,000 incidents of Zelle scams.

Despite their best efforts, the Friedmans could only recover a meager $278. Undeterred, the resilient couple saved for an additional two years, finally realizing their dream of a backyard pool. Ironically, they purchased it from Kruglitz. This time however, the Friedmans opted for the old-fashioned security of a check.

Source: 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.

Avoiding a Pool Scam

Paying contractors for services, especially significant projects like building a pool, requires a thoughtful and secure approach to mitigate the risk of scams. Here are some best practices that the Friedmans or anyone buying a pool should follow to safeguard themselves from a potential pool scam:

1. Research and Verify Credentials:
   Before entering into a contract, thoroughly research the contractor. Verify their credentials, licenses, and reputation. Check online reviews and ask for references from past clients. Confirm that the contractor has a physical office or business address and is not solely operating online.
2. Get a Written Contract:
   Always insist on a detailed, written contract that outlines the scope of work, timeline, materials, and costs. Ensure both parties understand and agree to the terms before signing.
3. Check for Insurance and Bonding:
   Ensure the contractor has liability insurance and is bonded. This protects you in case of accidents or damages during the construction process.
4. Establish a Payment Schedule:
   Create a clear payment schedule based on project milestones. Avoid paying the full amount upfront. Typically, a deposit is paid at the beginning, with subsequent payments tied to project progress.
5. Use Secure Payment Methods:
   When making payments, consider using secure methods such as checks or bank transfers. These methods provide a paper trail and an additional layer of protection.
6. Beware of Unusual Payment Requests:
   Be cautious if a contractor requests payment through unconventional methods or insists on immediate, large payments. Verify any changes in payment methods or amounts directly with the contractor.
7. Confirm Contact Information:
   Ensure that the contact information provided by the contractor, including phone numbers and addresses, is accurate. Scammers may use fake information to make tracking them down difficult.
8. Stay Informed about Common Scams:
   Familiarize yourself with common scams in the construction industry. Be cautious of contractors who pressure you to make quick decisions, provide significantly lower estimates than others, or have poor communication practices.
9. Regular Communication:
   Maintain open and regular communication with the contractor throughout the project. Not just through email, but through phone calls and text messages. Address any concerns or discrepancies promptly to avoid misunderstandings.
10. Verify Receipt of Payments:
    After making payments, request and verify receipts. Ensure that the receipts include details such as the amount paid, date, and the purpose of the payment.
11. Document Everything:
    Keep detailed records of all communication, contracts, payments, and any changes to the original agreement. These records can be valuable in case of a dispute.
12. Be Skeptical of Unsolicited Offers:
    Be cautious if a contractor approaches you unsolicited, especially if they claim to offer significant discounts or have leftover materials from a nearby job.

By following these best practices, homeowners can significantly reduce the risk of falling victim to a pool scam and ensure a smoother and more secure transaction with their pool contractor.