Money transfer apps are a convenient way to send and receive money, but scammers can use them to steal your money.
Bank of America customers earlier this month filed a class-action lawsuit against the bank, claiming that using Zelle poses a high risk of fraud, The Charlotte Observer reported.
In October, US Senator Elizabeth Warren released a report that found there were more than 190,000 cases of fraud reported from January 2021 to June 2022 among four of the banks that partially own Zelle.
Data also shows that people have fallen victim to scams on other money transfer apps.
According to a recent Pew Research Center survey, 13% of people who used Paypal, Zelle, Venmo or the Cash App said they’ve sent money to someone and later realized it was a scam. Another 11% reported that their accounts had been hacked.
Common scams on money transfer apps
While it’s easy to type in the wrong username and send money to the wrong person, someone who sends you a payment by mistake could be trying to scam you.
According to the Better Business Bureau, fraudsters link stolen credit cards to their digital wallets and use them to transfer money. When you send money back to the scammer, they will delete the stolen credit card and add their personal information, ensuring that the money is deposited into their account.
Here are some other common scams to watch for, according to the BBB:
— Canceled payments: Since some money transfer apps take days to process a transaction, some scammers will cancel them before going through.
— Fake official emails: Scammers may send fake emails asking you to enter your password on a fraudulent website to prevent your account from being suspended.
— Overpaying for an item: If you use money transfer apps to sell an item, scammers may claim they paid more than you owed and ask you to send the extra money back.
How to avoid fraud
Here are some ways you can avoid scams, according to the BBB:
— Only use money transfer apps to send payments to people you know personally
—If someone sends you money by mistake, ask them to cancel the transaction.
— Protect your account with additional security measures, such as multi-factor authentication, Touch ID and Face ID.
– Link your account to a credit card. Credit cards usually provide additional security if you do not receive goods or services you have paid for.
– Use a strong password.
—If you use money transfer apps to sell something, make sure the transaction clears before sending the item.
What to do if you suspect fraud
If you fall victim to a scam, the Federal Trade Commission recommends that you report the transaction to the company and request a reversal of the payment. If the app is linked to your credit or debit card, you should report the fraud to your bank. .
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