‘Painful Lesson’ From Payments Apps: It’s Much Easier to Get Ripped Off Than a Chicago Business Owner Using Zelle Realized

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The SMS warned Brinda Gupta that her Zelle peer-to-peer payment account had been compromised.

“He looked very professional,” says Gupta, a Chicago business owner.

The text message she received a week ago included a real phone number for Bank of America, which co-owns the Zelle payments app.

And that was followed by a phone call, also from what appeared to be a Bank of America number, that went to her voicemail.

Worried, Gupta, who runs a writing and publishing business, immediately called the number, hoping to rectify what was wrong.

As she waited in the bank’s automatic phone menu, tapping the numbers to reach different sections, her phone rang again – and again, it showed a Bank of America number.

So she took the call, and a man who introduced himself as a bank fraud agent said he would help protect his accounts.

Gupta now realizes that the man on the phone was not from his bank. And he wasn’t trying to help her, only himself.

He was a con artist who spoofed real Bank of America phone numbers in his texts and calls to make it look like they were legitimate.

Brinda Gupta, a Chicago businesswoman, fell victim to a sophisticated digital payment scam.
Provided

And while he was talking to Gupta about steps supposed to protect his online accounts, he was actually gleaning information that allowed him to set up a parallel Zelle account – and transfer over $ 6,000 from his account to his in two. transactions that took a few minutes. complete.

With peer-to-peer digital payment apps growing in popularity – an estimated four in five Americans use them as a way to quickly and easily pay a bill or transfer money to a friend – they have become a big deal. growing target for crooks. Nonprofit consumer watchdog organization US PIRG Education Fund says app complaints have increased during the coronavirus pandemic.

Payment apps – which include Zelle, Venmo, Square, and others – can be more convenient than a credit card. But they don’t offer the same protections as credit cards, for example, to go to the credit card company and dispute a fraudulent debit.

Using a payment app is like paying someone cash.

“Peer-to-peer applications have the least” protection under the law, says Abe Scarr, director of the Illinois PIRG Education Fund. “With a credit card, you have a certain level of recourse” – the credit card issuer “may let you get away with it. And they don’t draw directly from your bank account.

Abe Scarr, Illinois PIRG.

Abe Scarr, Illinois PIRG.
Sun-Times file

Additionally, the default settings of some payment apps may allow strangers to see where you are sending money – information about your financial life that you probably wouldn’t knowingly share.

It’s not just ordinary people who have been tricked into using payment apps. U.S. Representative Matt Gaetz, R-Fla., Has been reported to be under federal investigation for recruiting women online for sex and paying a 17-year-old to have sex with him, allegations he denied. the Daily beast The outlet reported that it was able to see Gaetz’s Venmo transactions with a friend who is a known sex trafficker which totaled the same amount as the friend’s mobile payments to several young women.

When the apps are used in scams like it was with Gupta, they often work because the crooks create panic in the victim.

According to US PIRG, who analyzed complaints to the Federal Office for Financial Consumer Protection from 2017 to last April, there were 9,277 complaints to the agency regarding payment applications. They ranged from problems opening, closing or managing an account to being victimized by a scam to experiencing an unauthorized transaction. In April alone, there were 970 complaints, nearly double the previous peak in July 2020.

A survey last year by NerdWallet It is estimated that four in five Americans now use digital payment apps, originally designed to help friends send money to each other quickly and easily, such as sharing a restaurant tab.

But as app acceptance grows, so do complaints. Steve Bernas, general manager of the Better Business Bureau of Chicago and Northern Illinois, says his “Scam Tracker” database is filled with complaints about apps.

Bernas says crooks use payment apps more often these days to scam people.

One way involves what is supposed to be sales of purebred puppies. Unsuspecting shoppers are told they need to send money through an advance payment app to get the puppies. By the time they realize that there are no purebred puppies and that they have been taken, their money is gone.

In another common scam, a scammer “accidentally” overpays a person for something using what is later discovered to be a counterfeit check, then asks: can you refund me the difference using a payment app? The check is bounced, but not until the app has paid, leaving the victim distraught.

Atlanta Police recently warned of a scam in which crooks claim to be in distress and their phones are dead. They borrow a phone from a Good Samaritan and use it to quickly and stealthily access their payment apps and steal money.

“There are so many variations that it’s hard to keep track,” says Bernas.

Steve Bernas, CEO of the Better Business Bureau of Chicago and Northern Illinois.

Steve Bernas, CEO of the Better Business Bureau of Chicago and Northern Illinois.
Sun-Times file

If you use a credit card and then discover fraud, you can dispute the payment and often get a refund from the credit card issuer. Under federal rules, consumers may not lose more than $ 50 due to unauthorized credit card charges.

So a lot of people assume they have similar protection if they’ve been tricked into paying someone through an app. They are wrong. Although digital payment apps fall under the federal Electronic Funds Transfer Act, consumer initiated transactions on the apps are exempt from the law’s definition of “unauthorized charges,” even though they are part of it. fraud.

Payment application companies, including warnings on their websites that warn users to only deal with people they know and trust.

When asked about Gupta, a spokeswoman for Bank of America said the company would not comment, citing customer privacy.

But he investigated and quickly refunded the money to her.

“We remind customers that they should not give confidential account information to unidentified people, ”spokeswoman Betty Riess said. “Bank of America and other legitimate companies would not ask for sensitive account information, such as access codes or authentication codes. “

Early Warning Services LLC, which manages Zelle, also warns users on identity theft scams. Consumers “should only send money to people they know and trust, treat it like money and be aware of situations” too good to be true “,” spokesperson Meghan Fintland.

Gupta thought she could spot a scam. Now she wants others to know how sophisticated some of them can be.

“Honestly, if you get a call about your finances, no matter what, stop,” she says. “It’s a painful lesson.”

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