FORT WORTH (CBSDFW.COM) - Payment apps, such as Zelle, Venmo, PayPal, and Cash App, are not only fast and convenient ways to send money but are also fast and convenient for scammers.
The number of people who reported losing money to fraud through a payment app doubled last year, according to the Federal Trade Commission.
While more people are using payment apps to do online banking since the start of the pandemic, many are doing so without knowing the risks.
"I definitely thought you had protections just like a credit card," said Charee Williams of Fort Worth.
The middle school science teacher said her account was drained to $0 after she fell for a scam using her Cash App account.
Williams said it started when she tried to contact Cash App to dispute an online shopping charge.
Cash App does not have a direct customer service phone number but Williams didn't know that at the time. So when she found online what looked like a helpline number, she called.
"I thought I was talking to Cash App," she said. "I had no idea it was a scam."
The number Williams called was a fake 1-800 help line. As she followed the instructions from the person on the other end of the call, she looked down at her phone and saw her last $167 disappear.
"My heart dropped because all my money was gone," she explained. "It was all gone – all the money in my Cash App account and all the money from my bank account that I moved into my Cash App account."
For two weeks, until she got her next paycheck, Williams and her teenage daughter had no money to pay bills, to pay rent, or to pay for food.
"We barely bounced back from that," she said. "We did but we barely bounced back from that. It was hard."
Consumer advocates say payment app users often mistakenly believe payment apps work just like a credit or debit card. So if there's fraudulent charge you just dispute it, the bank investigates, and you get your money back. But that's not how payment apps work.
"Unfortunately, they are in for a rude awakening when they dispute these transactions and the banks refuse to provide the credit," said John Breyault of the National Consumers League.
Breyault said even Zelle that is often automatically tied to a consumer's bank account is vulnerable to fraud just like the other popular payment apps.
While consumers may not realize the lack of protection, Breyault said scammers definitely do.
"Scammers are finding out this is a very lucrative way for them to get paid," he said.
In the fine print when you sign up, most apps warn you not to send money to someone you don't know.
Many, like Cash App, will even double prompt you if you're sending a payment to someone outside your contact list.
In a statement from Cash App, a company spokesperson told the I-Team, "Preventing fraud is critically important to Cash App. We continue to invest in and bolster fraud-fighting resources by both increasing staffing and adopting new technology. We are constantly improving systems and controls to help prevent, detect, and report bad activity on the platform."
The company is also working with platforms, like Google and Facebook, to take down fraudulent pages with fake 1-800 numbers posing as Cash App.
Consumer advocates, however, say more protections are needed.
"We think Congress needs to step in here," said Breyault. "These P2P payment apps are not protected by the kind of federal regulations against fraud that people benefit from with credit and debit cards."
If Congress requires these apps to reimburse fraudulent charges, someone would have to pay for that. This would likely translate to additional costs to use these apps.
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