TAMPA, Fla. (WFLA) — For anyone who uses mobile payment apps like Cash App, Venmo, PayPal and Zelle, your phone is a gateway to your finances.
As the coronavirus pandemic spread, touchless payment options increased in popularity. These apps make it easy to send or receive money faster than ever.
But mobile payments apps have also become a playground for thieves.
“It’s easier to just be like, ‘Oh yeah, put my phone number into this app, and you can just send it there,” Frank Wood told 8 On Your Side Consumer Investigator Shannon Behnken.
For years, Wood had no issues using mobile payment apps. Then one day, he woke up to find his Cash App account drained to nothing.
“The first one was right there, $212, [then] $206, $206, $298.88,” Wood said, showing the transactions on his phone. “I even caught these while they were still pending so they didn’t fully go through, and they said, ‘Oh call Target, they can handle it.’ I called Target, and they go, ‘No we can’t.'”
He’s not alone. Complaints to federal regulators about mobile payment apps are up a whopping 300 percent from last year.
With apps like Cash App, Venmo, Paypal and Zelle on your phone, you just connect your bank account and instantly pay a bill or even pay a friend your half of dinner.
The instantaneous part is what is so appealing to crooks, explained Tony Urbanovich of Cyber Florida. The scheme often starts with innocent-looking text messages, he said, such as about a package delivery or a bank notification – something to get your attention.
“If it even sniffs of something that, you know, this doesn’t make sense, actually call your bank or call your institution,” he said.
Once you click, spy malware can be downloaded onto your phone.
“They basically have full control of your phone,” Urbanovich said.
With that control, the crooks can transfer money anywhere they want to. And that’s what makes this a successful crime: when you complain to the app company, it looks like you made the transfer.
Senior Director of Federal Consumer Programs Ed Mierzwinski from U.S PIRG said the fraud is being “encouraged by the low level of customer service offered by these apps.”
Mierzwinski said there’s a loophole in the stature that basically says they don’t owe you the money if you initiate the transaction.
Mierzwinski said it’s crucial for policymakers to require app providers to investigate errors even when the consumer made the mistake or sent the money — and to ensure that consumers are protected when they are defrauded into sending money.
Security experts offer these tips to keep your money safe:
- Only send money to people you know and trust and verify their username before you click the “pay” button.
- Be suspicious of any request for a payment your weren’t expecting.
- Make sure your privacy setting are set to “private.”
PIRG offers these tips:
- Treat money in your P2P app like hard cash. Only use it for friends and others you both know and trust.
- If possible, keep a separate bank account to link to P2P accounts. Do not link P2P accounts to all your funds.
- If you are going to send money to a particular person for the first time through a P2P payment app, even to a person you know, you should either initially send $1 as a test or ask the person to send a request for the money. Many accounts have generic names such as BobSmith02. The accounts can have photos, but the photos are so small, it’s difficult to tell whether it’s the correct person.
As for Wood, he doesn’t know how crooks accessed his money and says pleas for help to Cash App ended when customer service abruptly said his issue was resolved, but he says that wasn’t true.
“To see that was what really solidified, ‘Wow, you guys aren’t going to help me,” Wood said.
When Investigator Shannon Behnken brought this situation to the attention of Cash App, the company took a closer look. Wood woke up to find every penny back in his account.
“I can’t thank you guys enough for seriously making a difference and going to bat for me,” Wood said.
To report complaints about a digital payment app you are using, visit the Consumer Financial Protection Bureau.
To report scams and fraud, visit the Federal Trade Commission.