A class-action lawsuit has been filed by Bank of America customers regarding the risks of fraud associated with the use of the Zelle payment app, as reported by The Charlotte Observer. This follows a report by U.S. Senator Elizabeth Warren which identified over 190,000 scam incidents between January 2021 and June 2022 across four banks that co-own Zelle. Moreover, data indicates that users of other payment apps such as PayPal, Venmo, and Cash App have also experienced scams.
According to a Pew Research Center survey, a portion of users have mistakenly sent money to scammers or had their accounts compromised. The Better Business Bureau (BBB) has highlighted that scammers may use stolen credit card information to transfer money and then persuade the recipient to send it back, only to replace the credit card details with their own, diverting funds to their accounts.
Other prevalent scams include the cancellation of payments before transactions are completed and sending spoofed emails that mimic official communication, tricking recipients into providing passwords on fake websites. Overpayment claims for items sold through these apps are also a tactic used by fraudsters.
The BBB recommends only transferring money to known contacts, asking senders to cancel any mistaken transactions, using additional security measures like multi-factor authentication, and linking accounts to credit cards for extra security. Strong passwords and ensuring transactions are fully processed before sending items are also advisable.
In case of suspected fraud, the Federal Trade Commission suggests reporting the incident to the payment app company and requesting a reversal of the payment. If linked to a credit or debit card, reporting to the bank is also recommended.
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