Payment App Warning: How to protect yourself when using apps like Zelle, Venmo
MILWAUKEE (CBS 58) – More and more people have ditched cash and checks and are instead sending money to family and friends using mobile payment apps. But some popular apps are seeing some complaints and scams.
Zelle is one of the fastest growing peer-to-peer payment apps out there. The mobile payment app partners with many major banks like Chase, Bank of America, and Associated Bank, meaning some mobile banking apps use Zelle to allow its users to send or receive money, like Chase QuickPay. Zelle prides itself on being safe, but the level of safety can be controversial.
Katherine Jade Holcomb thought she had a great deal on a ticket to a Milwaukee Bucks game but believes she was scammed. She sent $65 to a seller through Zelle on her Associated Bank mobile banking app.
“It was like as easy as possible because it was already hooked up to Associated and it went right through and he claimed it wasn't going through,” Holcomb said.
The seller told Holcomb he didn’t get the money and when she called her bank to investigate, she says they told her the money was already gone. She never received her ticket. Holcomb also immediately contacted Zelle, who she said told her there was nothing they could do.
“For the most part they don't take responsibility if it is a fraudulent claim,” Holcomb said.
In Zelle’s policy, it says their app is only meant for their users to send money to others they know and trust. It says:
THE SERVICE IS INTENDED FOR SENDING MONEY TO FAMILY, FRIENDS, AND OTHERS YOU TRUST. YOU SHOULD NOT USE THE ZELLE SERVICE TO SEND MONEY TO PERSONS WITH WHOM YOU ARE NOT FAMILIAR OR YOU DO NOT TRUST. ZELLE DOES NOT OFFER A PROTECTION PROGRAM FOR AUTHORIZED PAYMENTS MADE WITH THE SERVICE (FOR EXAMPLE, IF YOU DO NOT RECEIVE THE GOODS OR SERVICES THAT YOU PAID FOR, OR THE GOODS OR SERVICES THAT YOU RECEIVED ARE DAMAGED OR ARE OTHERWISE NOT WHAT YOU EXPECTED).
Another woman from Chicago said she tried to send a workman $1,150 through Zelle on the Chase app, but typed in the wrong information and the money went to the wrong person.
“There were two digits that accidentally got switched on the phone number,” Pamela said.
Jake Kessel has a similar story. He sent rent money through Zelle but his landlord got a new number and the money went to the wrong person.
“My money went to some random person instead of the intended recipient,” Kessel said.
In Zelle’s user agreement policy it says:
YOU UNDERSTAND AND AGREE THAT YOU ARE SOLELY RESPONSIBLE FOR ENTERING THE CORRECT MOBILE PHONE NUMBER OR EMAIL ADDRESS FOR THE PERSON THAT YOU ARE SENDING MONEY TO OR REQUESTING MONEY FROM, AND THAT YOU, NOT ZELLE OR THE NETWORK FINANCIAL INSTITUTIONS, ARE RESPONSIBLE FOR ANY AMOUNTS THAT ARE TRANSFERRED TO THE INCORRECT PERSON AS A RESULT OF YOU ENTERING THE INCORRECT MOBILE NUMBER OR EMAIL ADDRESS.
While there have been reports of scams, these apps are also making people’s lives easier, if they’re used as intended with family and friends. Consumer Reports says that Zelle, Venmo, Apple Pay and Cash App are all safe to use. Here’s how they work:
UW-Milwaukee Information Studies expert Khaled Sabha says typing in the wrong information is an easy mistake to make on peer-to-peer payment apps, which ultimately could cost its users.
“Once that money leaves from one account to another account it's gone and it's really hard to get that money back,” Senior Lecturer Khaled Sabha, with the School of Information Studies at UW-Milwaukee said.
He also suggests making your account more secure by setting up a pin code.
“Let's say somebody took the phone and they tried to send money, they would be prompted for a password,” Sabha said. “These apps are really great, makes our lives easier, but we just want to make sure we use it the secure way.”
As for Holcomb, she said she won’t use Zelle again and if she does use another payment app, it will only be with close friends.
“I wouldn't trust Zelle because they don't return your money,” Holcomb said.
Zelle tells CBS 58 News they’re still looking into Holcomb’s case, but tell people to only use the apps to send money to people they know. They said in a statement:
We want all consumers to have a positive experience with Zelle®. To avoid becoming the victim of a scam, we advise Zelle users to only send money to people they know and trust. This language is included in the Zelle app, throughout our website and within other consumer messaging. Our participating financial institutions provide similar language to their customers.