Payment App Fraud Can Be A Financial Disaster

Posted by Richard on December 15, 2022

There are lots of ways to get scammed out of money these days, but it is happening frequently with payment apps.
Pew Research found that 13 percent of payment app users realized they had sent money to scammers and 11 percent reported that their account had been hacked. Many more have likely been scammed without realizing it. And with authorized transactions, once the money is gone, it’s gone.
“Authorized” is the key word here. If you authorize a transaction and unwittingly sending money to a scammer, you’ll probably never see the money again.
How might a scammer trick you into authorizing a transfer? Often, fraudsters use tried and true scam tactics, simply adapting them for payment apps like Zelle or Venmo.
One common tactic is to text someone pretending to be a bank or other authority like a tax collector, and then asking an account owner to make a transfer. A scammer might claim that you will get hit with overdraft fees or other penalties if you don’t pay up.
They might ask you to click on a link where you will then reveal banking information. They might claim that you’re simply moving money from one of your accounts to another account that you supposedly own. In reality, the scammer probably owns or can at least access the account.
With scammed funds, banks find themselves in a tight spot: They’re obligated to approve any transfer that the account holder makes.