Complaints against mobile payment apps like Zelle, Venmo surge 300% as consumers fall victim to more money scams

Complaints against some digital payment companies and apps like Venmo, Cash App or Zelle are skyrocketing, in accordance to a troubling new report.

Nonprofit U.S. Public Interest Research Group [PIRG] says high points embrace scams, hassle utilizing accounts and poor customer support. The group analyzed more than 9,200 complaints filed with the Consumer Financial Protection Bureau from 2017 to April of 2021. 

The report discovered more than 2,700 complaints have been constituted of January to April of this year — in contrast to simply over 600 in the identical interval final year.

Roughly 4 out of 5 Americans use mobile payment apps. 

One of them is Luke Krafka, knowledgeable cellist from Long Island, New York. Krafka usually performs in concert events with a altering cast of musicians, who’re often paid in money — and he says mobile payment apps have made that activity rather a lot simpler.  

“Paypal, Venmo, cash app, yeah. There’s no paper involved, there’s no checks involved, there’s no waiting,” he instructed CBS News Consumer Investigative Correspondent Anna Werner, “You get paid right away, goes to your bank account.”

In October 2019, a brand new buyer reached out to hire him for a marriage.

“It was gearing up to be a normal, you know, wedding. And I had reached out to my friends that are good for the gig,” he mentioned.

The shopper instructed him he would ship a examine of roughly $1,000 for Krafka and one other $950 to pay for the shopper’s “sound man” — who he requested Krafka to then pay by means of a mobile payment app.

“I said, ‘look, if you send me the money, that’s no problem, that’s fine,'” Krafka recalled.

Mobile payment apps enable customers to pay others instantly, by means of financial institution accounts or bank cards linked to the app. 

Their simplicity is often a very good factor, however not at all times, as Krafka discovered after depositing the marriage shopper’s examine for $1,960.

“I checked the following day, and the full amount was in my bank account,” he mentioned.

Then as requested, he despatched the shopper’s “sound man” $950 by means of the payment app Zelle.

“I believe it was the following day that check bounced,” he mentioned. “And when that happened, then I slowly started to put all of this together.”

The individuals who supposedly employed him stopped answering his calls — and he was out the $950.  

“I said look I think I’ve been scammed,” Krafka mentioned.

PIRG’s report checked out over 9,000 complaints to federal regulators about digital wallets and payment apps, together with PayPal, Venmo, CashApp and Zelle. 

They discovered those filed between January and April of this year have been up more than 300% from the identical interval final year — with many dropping money to scams or fraud.

“If it’s a scammer, it is not coming back,” mentioned Ed Mierzwinski, who oversees PIRG’s Federal Consumer Program.

Unlike with credit score and even debit playing cards, app transactions are instantaneous, Mierzwinski mentioned. 

“There are no rules that protect you very well at all when your money goes out of your account and into somebody else’s account,” he mentioned.

It is particularly tough when the scammed consumer initiated the transaction. 

Krafka mentioned he reached out to his financial institution to get the money again, however was instructed they could not assist him.

“I was surprised that there was no recourse and that once it’s done, it’s done and there’s nothing you can do,” the skilled musician mentioned.

Zelle wouldn’t touch upon Krafka’s case, however mentioned its high precedence is “protecting consumers from scams and fraud.” The company supplies a comprehensive list of recommendations on its website for consumers to defend themselves.

Cash App has a assist heart for consumers on-line and on their mobile app as nicely as a 7-day customer service phone number, and encourages folks, “If you believe you have fallen victim to a scam, you should contact Cash App Support through the app or website immediately.” They additionally present articles on recognizing and avoiding scams on their web site.

Venmo and Paypal urge consumers who assume they’ve fallen victim to a scam to “contact Customer Support directly.” They present resources for what to look out for and the way to report it on their website.

“We also recommend that customers contact [email protected] to share information on suspected spam. Our dedicated security team will review the information and take action as needed,” the company web site reads.

All of the app corporations instructed CBS News they work to cease unhealthy actors and have processes in place to assist flag scams. They additionally warn consumers to be vigilant, and solely ship money to folks they know — not to strangers.

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