People use apps like Cash App, Venmo and Zelle every day, but consumer advocates tell WSB they are seeing a skyrocketing increase in these apps being used to take money directly from bank accounts.
Ashli Lincoln learned there is virtually no consumer protection for victims in this situation with one app in particular: Zelle.
There is fraud protection in some cases, such as if money was withdrawn from your account from an ATM without your knowledge, but in cases where Zelle is used to commit fraud, victims are left having to deal with the loss.
One metro Atlanta woman Lincoln spoke with, who didn’t want to be identified, said thousands of dollars were swiped from her Chase bank account using the Zelle app.
“This is definitely fraudulent. This is a scam,” she said. “Honestly, it’s kind of gross.”
Last February, she said thieves posed as representatives with the bank’s fraud department.
“(They had) my Social Security number, so they had it all, so clearly this is my bank,” she said.
They claimed to help stop fraudulent activity on her account, but actually, they were trying to get her personal information to trick her into sending money from her Zelle account.
WSB consumer adviser Clark Howard said scams involving third-party cash payment apps have hit a fever pitch.
“The ugly, ugly, ugly, events involving Zelle keep going on and on and on,” Howard said. “The scams stealing your money through Zelle will keep morphing.”
This month, Howard warned consumers on his podcast that unlike checking, savings and credit union accounts, there are no fraud protections when it comes to apps like Zelle.
“It is far more dangerous to use than the already dangerous Venmo or Cash App,” Howard said. “Zelle is married at the hip to your bank account, and if a criminal is able to tap into money in your account through Zelle, the money is gone forever because the banks have been able to stop any regulatory action, or laws being passed that would give consumers normal protection.”
Howard said it’s happening more frequently because criminals know this.
Last spring, Natalie Lieberman had $15,000 stolen from her Bank of America account using her Zelle account.
“It made me feel so incredibly vulnerable and exposed,” she said.
Howard said they’re able to get your money easily. You’ll get a fraud alert text confirming a Zelle withdrawal from your account. Then, you’ll get a call from a number using spoofing technology that has the same the same caller ID as your bank.
In some cases, they’re getting personal information to access your Zelle account, and in others they’re having users send money directly to them.
“And the steps they’re doing are the opposite that are allowing a criminal to use Zelle to empty out all the money from your bank account,” Howard said.
Howard says the best protection a consumer can do is simply deactivate their Zelle accounts tied to their banks.
“Chase is putting up their hands and saying, ‘We can’t do anything,’ saying, ‘We can’t control Zelle and we can’t control if they do this,’” he said.
Lincoln found out this isn’t just impacting Chase Bank customers, but several other banks as well.
She found Bank of America has the greatest number of victims related to this scam, and Wells Fargo is right behind them.
As of now, Bank of America is the only bank offering fraud protection in these cases.