Do Scammers Use Venmo and Zelle for Online Financial Crimes

Scammers have been known to use Venmo and Zelle for online financial crimes, often targeting unsuspecting victims through social media and online marketplaces.

These services are designed for person-to-person payments, but they can also be used for scams, especially if the victim is unaware of the risks.

Venmo and Zelle transactions are often irreversible, making it difficult for victims to recover their lost funds.

In some cases, scammers may use these services to send fake payments to victims, only to request the money back later.

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Scammers are getting creative with their tactics to trick you into sending them money through Venmo and Zelle. They often pretend to be someone you trust, such as a family member or a bank employee, and ask for money in a convincing way.

Impersonation scams are becoming increasingly common, thanks to artificial intelligence that allows scammers to clone real voices and faces. This makes it harder to detect impostor scams.

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Scammers also use fake seller scams, where they advertise a product or service on online platforms and ask for payment upfront. If you send them money, they'll disappear without delivering the goods.

Advance-fee scams are another tactic scammers use. They promise a reward or a service in exchange for your help, but it's just a way to get your money.

Phishing scams are also on the rise, where scammers try to trick you into clicking a link that allows them to install malware on your device or steal your login credentials.

Here are some common scam tactics to watch out for:

It's essential to be cautious when using peer-to-peer payment apps like Venmo and Zelle, as they can be vulnerable to scammers. Always verify the identity of the person you're sending money to and be wary of requests that seem suspicious or urgent.

Zelle was the third most frequently mentioned payment network in consumer reports of scams in 2023, according to the Federal Trade Commission.

P2P apps like Zelle and Venmo are vulnerable to scammers because they don't have the same consumer protections as credit cards. Transactions are instantaneous and usually irreversible.

Impersonation scams are a common type of scam on Zelle and Venmo, where scammers pretend to be someone you know or trust and ask for money.

Fake seller scams also occur on these platforms, where scammers advertise a fake product or service and collect your money upfront.

To protect yourself from P2P scams, only use Zelle and Venmo with trusted parties, such as friends and family members.

Be suspicious of out-of-the-blue requests, and treat digital payments like cash. If you'd hesitate to mail a $100 bill to a stranger, you shouldn't send them $100 through Zelle or Venmo either.

Venmo has a dedicated web page on the topic of scams, which lists the top Venmo scams, including fake seller scams and phishing scams.

The top Zelle and P2P scams include impersonation scams, fake seller scams, advance-fee scams, and phishing scams.

Here are some steps to take if you're the victim of a P2P-based scam:

Only use Zelle, Venmo, and other P2P apps with trusted parties, such as friends and family members, or local businesses with brick-and-mortar locations and flesh-and-blood employees.

Be suspicious of out-of-the-blue requests, whether it's a knock on your door, an email, a text message, or a chat request on social media. If you get an unsolicited call from your bank, don't take the call, instead look up the bank's phone number online and make an outbound call to ask if it was legitimate.

Treat digital payments like cash: if you'd hesitate to mail a $100 bill to a stranger, you shouldn't send them $100 through Zelle or Venmo either.

Be wary of urgent messages, as legitimate businesses don't ask customers to send information or money "right now."

Here are some red flags to watch out for:

If you're the victim of a P2P-based scam, lock down your financial profile by setting up alerts with your bank, changing your online banking username and password, and freezing your credit.

File a police report, even if law enforcement may not investigate, as it creates a record of the event that can be helpful later in case of additional fraud or identity theft.

Notify the feds by reporting the fraud on the Federal Trade Commission's website, ReportFraud.ftc.gov.

Contact your bank or credit union at the customer support number on the back of your debit card, and go directly to the app's website to reach customer service.

If you're a victim of a scam, you should contact your financial institution right away.

Reimbursing victims can be a complex process, and it's essential to understand the eligibility criteria.

Unauthorized transactions, where the consumer had no involvement in the fraudulent transaction, may be reimbursed by banks.

But if you authorized the payment, you may not be able to get your money back.

Zelle suggests on its website that reimbursement is dependent on banks' policy.

Venmo and PayPal also offer advice on scams on their sites, and they warn that they can't reverse a payment unless the recipient gives their explicit permission.

Reimbursing victims of scams can be a complex process, but it's essential to understand the options available to you.

Early Warning Services, the company behind Zelle, has announced a consumer reimbursement benefit for specific scam types. However, the details of which scams are eligible are unclear.

Unauthorized transactions, where you had no involvement in the fraudulent transaction, can be reimbursed by your bank, but only if your bank's policy allows it.

You should contact your financial institution to report the scam and inquire about reimbursement options, but be aware that authorized transactions may not be reimbursable.

Venmo advises reporting scams to their support team, but they can only reverse payments if the recipient gives explicit permission.

PayPal's site also provides similar advice, emphasizing the importance of reporting scams to get any possible reimbursement.

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Self-reporting offers an incomplete picture of P2P payment platforms' security. Few platforms publicly report scam or fraud data in a standardized manner, making it difficult to compare rates.

Early Warning Services, the company behind Zelle, reported that 99.9% of transactions were completed without any report of fraud or scam. A spokesperson provided a more specific figure: over 99.95% of completed Zelle transactions in 2023 involved no reports of fraud or scams.

Zelle's reported rate of 0.05% is a 50% decrease from 2022, despite a 28% increase in network transaction volume. This benchmark is comparable to Venmo's 2018 transaction loss rate of 0.25%.

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According to a J.D. Power survey, 3% of Zelle customers reported losing money to a scammer, which is lower than the average 5% reported by users of other P2P transfer brands.

The survey, which gathered 5,727 responses, found that 5% of Zelle users sent money to the wrong person, which is lower than the 7% average among all brands.

One percent of Zelle users reported an unauthorized transfer from their account, compared to 5% on average among all brands.

The overall rate of fraud experienced by Zelle customers was 8%, which is lower than the 13% average across the P2P transfers industry.

Zelle's performance in the survey was compared to other popular P2P transfer brands, including Apple Cash, Cash App, Google Pay, PayPal, and Venmo.

The survey's results suggest that Zelle is no worse than average when it comes to users reporting experiences with fraud and scams.