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Know these risks with money transfer apps

People love money transfer apps like Zelle, Venmo, Cash App, and Apple Pay, but they are also a convenient way for a scammer to steal your money.
Posted at 6:58 AM, Sep 06, 2023
and last updated 2023-09-06 06:58:57-04

By now, most of us have at least tried using a money transfer app. Usually, it is to pay a friend for concert tickets or dinner.

Money transfer apps like Zelle, Venmo, and Cash App are so convenient because there are no more wiring checks or running to the ATM. You just send money via your phone. But they do come with risks, as some people find out the hard way.

 Woman watches as scammer empties her bank account

Kathy Wical was trying to get a refund from Apple but suspects she accidentally called a fake Apple number she found in an online search.

"I thought I was talking to Apple itself," she said.

But it wasn't really Apple, and that mistake cost her almost $1,000.

She says the customer service agent on the line was coaching her to transfer $998 dollars to him out of her checking account, using a money transfer service.

"He said put in this number, and this number in. And I didn't realize I was transferring money," she said.

Panicked, Wical called her bank but learned once money is transferred out, it's gone for good.

"They told me it was a you're out of luck kind of thing," she said.

Need help? Beware of fake customer service phone numbers
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Need help? Beware of fake customer service phone numbers

When you need help, it's tempting to look up a customer service phone number online. But these days that can be very dangerous.

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 Can you get your money back?

Consumer Reports recently evaluated the potential risks of some popular money transfer, or peer-to-peer, payment apps. It found that apps are unlikely to intervene in many cases of suspected fraud.

CR's Director of Financial Fairness, Delicia Hand, says "They don't reimburse consumers for these instances where the consumer has actually authorized the payment."

That means if you’re the one who hit "send," even inadvertently, it’s unlikely you'll get money back. CR says apps, however, may compensate users in cases where a device or password was hacked.

To use apps safely, Consumer Reports says:

- Only send money to people you know.

- Confirm a recipient's identity before sending money.

- Send a small test payment to make sure it goes to the right person.

- Turn on all identity verification options.

- Never start punching numbers into your phone simply because a customer service agent instructs you to.

We have contacted Wical's bank, asking if they might be able to reverse the transfer, as unlikely as that may be. She learned you need to be careful letting a customer service agent access your phone.