Peer to Peer Payment Payment Services (P2P) such as Zelle, Venmo, ApplePay, PayPal, Square Cash and PopMoney are popular ways to quickly and conveniently send money electronically from your credit card or bank account. These services are used by 113 million Americans. These services also provide easy ways to be scammed and unlike scams targeting your credit cards directly, you may not have as much protection under the law to get your money back if you do get scammed. Zelle which originated in 2017 is operated by a consortium of banks and appears on your mobile banking app. Sending money through Zelle only requires you to enter the recipient’s phone number or email address. In addition to scammers luring their victims to pay for worthless items through P2P services, scammers have also been sending phishing emails and text messages in which they lure their victims into providing their Zelle usernames, passwords and PINs to take over their victims’ bank accounts through their Zelle accounts.
A complicated scam that is happening now occurs when you receive a call telling you that the caller mistakenly used Zelle, Venmo or one of the other similar P2P services to send you money intended for someone else and asks you to return the funds to him or her. When you check your account, you find that indeed money was deposited into your account. But should you return the money? The problem is that scammers connect stolen credit cards to a P2P account and then use it to transfer money to an unsuspecting victim whom they then contact and tell them that the money was sent mistakenly and ask for the money to be returned. Meanwhile, the scammer deletes the stolen credit card from his or her account and replaces it with his own credit card so when you send money, you are not sending it to the credit card used to send you the money, but rather the credit card account of the criminal enabling him or her to launder the illegal funds. When this is discovered, you will end up losing the money you sent.
Before signing up for any P2P service, you should familiarize yourself with their fraud protection rules. In the fine print of many P2P services, you may find that you have little, if any, protection if you use the account to purchase something that ends up to be a scam. While PayPal offers significant protection from fraudulent transactions, Zelle and Venmo, for example do not offer such protection, which is why these services should never be used for commercial transactions, but only to transfer small amounts of money to people you know. In order to protect your account from being hacked and being taken over by a scammer who could access your credit card or bank account, you should use a PIN or other dual factor authentication whenever your particular service provides for it. In addition if you are hacked and your account is tied to a credit card, you should be able to get the amount fraudulently taken refunded from your credit card company in accordance with federal law and if it is tied to a bank account, you should be able to get the money refunded if you report it immediately pursuant to the Electronic Transfer Act. Zelle does not let you use a credit card, but Venmo does. You are always safer using a credit card rather than having your bank account tied to your P2P app.
To avoid having your Zelle account and other accounts from being taken over by hackers, never provide your username, password or PIN in response to any email, text message or phone call unless you have absolutely confirmed that the request for this information is legitimate, which it never is. You can confirm this by contacting your bank or other company by calling them at a telephone number you know is accurate. Even if you get a call that appears to come from your bank or other company with which you do business, your Caller ID can be tricked by spoofing to make the call appear legitimate when it is not.
As for the specific stolen credit card scam indicated above, if you do receive such a call and money is put into your account in that manner, you should contact your bank for assistance in straightening the situation out and determining whether a stolen credit card was used for the transfer or whether it was indeed just a legitimate mistake.
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