Concerned by a surge in mobile payment fraud draining bank accounts through the use of popular and widely-used mobile payment apps like Cash App, Venmo and Zelle, Manhattan District Attorney (DA) Alvin Bragg has sent letters to the CEOs of the companies that own these peer-to-peer payment services.
Reportedly now handling an estimated $1 trillion in payments, Bragg said these apps are exposing its users to scammers and thieves – costing them a lot of their hard-earned cash.
The DA addressed the letters to the parent companies of Venmo, Cash App and Zelle. In his letters, Bragg demanded the app owners and operators "improve their security and protect their users from scams and thefts." He specifically requested that they "impose limits on transactions, require secondary verification of up to a day and better monitor unusual activity." He also requested meetings with the companies to discuss these issues in detail.
"Two taps and someone's life savings could be gone," warned Bragg.
Bragg is demanding that the parent companies of these payment apps install tighter security measures, including multi-factor authentication, lowering the limit on daily transfers, requiring wait times on transfers of larger amounts of cash and better monitoring of suspicious activity.
Many people getting scammed through payment apps
According to a September 2022 survey conducted by the Pew Research Center, while many had praised these app platforms for making it easy for them to receive and send money to businesses, family and friends and making paying for things easier, there's also a significant number who had been scammed or had their private information breached through these apps. (Related: Beta-testing, crypto-romance and more: FBI warns internet users about app-hacking techniques.)
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Fraud claims involving payment services have tripled between 2020 and 2022, costing consumers hundreds of millions of dollars each year.
"No longer is the smartphone itself the most lucrative target for scammers and robbers – it's the financial apps contained within," said Bragg. "Thousands or even tens of thousands can be drained from financial accounts in a matter of seconds with just a few taps."
"These crimes involve an unauthorized user gaining access to unlocked devices and then draining bank accounts of significant sums of money, making purchases with mobile financial applications and using financial information from the applications to open new accounts," continued Bragg.
The DA noted that while in most cases it is relatively easy for criminals to steal or trick their way into the locked smartphones of their victims, in some cases thefts can turn violent. In Los Angeles, several people were notably robbed of thousands of dollars through Venmo at knifepoint. Similar incidents have been reported in Florida, Illinois, Kansas, Louisiana, Tennessee, Virginia and West Virginia.
"In the most disturbing cases, offenders have violently assaulted or drugged victims, and either compelled them to provide a password for a device or used biometric ID to open the victim's phone before transferring money once the individual is incapacitated," Bragg warned.
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Watch this video exposing a Cash App scam.
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