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.
Recently, Michigan Attorney General Dana Nessel issued a warning about a new scam targeting Venmo users across the country that also applies to the other P2P services as well. The scam starts when the scammers use a stolen credit card to send money to their targeted victim’s Venmo account and then contacts the targeted victim and tells him or her that the scammer had accidentally sent the money to the targeted victim and asks for it to be sent back. If the victim complies with what appears to be reasonable request, the targeted victim will end up losing the money he or she sends using Venmo because the law does not protect him or her in this instance while the owner of the stolen credit card will get the funds back into his or her account because it qualifies as a fraudulent transfer not authorized by the card holder.
TIPS
No good deed goes unpunished. The best course of action if you are contacted by someone who tells you that he or she accidentally sent you money through Venmo or any other P2P service is to report it to the service for investigation which will confirm that it is a scam.
There are many other scams involving Venmo, Zelle and other P2P services and the legal protection that you get with these services in the event you are scammed is nowhere near as great as the protection you get with your credit card. A good rule to follow is to never use Venmo, Zelle or any other P2P service for any business transaction, but limit their use to small transfers between friends and family.
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