Digital Payments Can Cost More Than You Think
Apps like Zelle and Venmo have gained popularity as speedy and convenient ways to send cash from bank accounts to friends and family. Unfortunately, they are also gaining popularity with scammers.
A crime dubbed “the Zelle scam” may begin when a criminal sends a text to your phone that looks like it came from your bank, and asking if you approved a Zelle transaction. The message may warn that you have been involved in a fraudulent transaction. If you answer the text, the scammer follows up with further texts or a phone call that also appears to come from your bank. Typically, victims are told they can stop the fraudulent transaction by re-sending money to themselves and providing certain data.
When a consumer complies, the crook steals money from their bank account – and the payment apps enable fraudsters to obtain cash almost instantly. “A couple years ago, we were just starting to talk about it,” John Buzzard, lead fraud analyst at Javelin Strategy & Research, told the New York Times. “Now, it’s common and everywhere.”
Be aware: You may not be able to get back money lost in this type of heist. While you should promptly report such a crime to your bank, financial institutions often draw a line between transactions you never authorized (which may be reimbursed) and those, such as payment scams, in which you “cooperated” or “facilitated,” which they define as hitting a link.
The New York Times recently reported on such a case involving a longtime Wells Fargo customer. Wells Fargo maintained that the customer had voluntarily provided the information and chose not to compensate him.
In a recent email, Capital One Bank cautioned consumers that they may lose their money if they cooperate with payment scammers. “Neither Zelle nor Capital One offers a protection program for authorized payments – for example, if you buy an item with Zelle, but you don’t receive it or it’s not what you expected,” the bank wrote in the email. “If this happens, you may not get your money back, so only use Zelle and third-party payment apps to pay those you know and trust.”