App Fraud is on the Rise: Here’s What Consumers Should Know to Protect Themselves
Money transfer apps like Zelle have made our lives much easier – need to pay a friend your share of the dinner bill or send your sibling half of mom’s birthday gift? With one click, the money is out of your account and into theirs. This convenience has led to exploding growth: Nearly 10,000 financial institutions, including Old National, participate in the Zelle network, and Zelle reports that consumers and businesses sent nearly 2 billion payments through the network in 2021, up 49% from 2020.
Yet while its benefits as a fee-free way to make or receive an immediate cash transfer with your mobile device are clear, there is also potential for fraud. Here’s what you should know.
Keep Your Guard Up for These Common Scams
Cons involving money and technology are nothing new; the Federal Trade Commission (FTC) reported that fraud-related losses increased more than 70% between 2020 and 2021. But sometimes it’s easy to become complacent, and that’s when thieves can strike. Here are three Zelle-related scams to watch out for.
1. A scammer poses as a bank employee asking for access or to reverse a charge.
This swindle often works much like other well-known bank schemes where you click on a link that looks like it came from your bank and inadvertently give scammers access to your account or reveal private information. But there’s another variation that’s making the rounds. In this, you receive a text message from your bank asking if you just made a Zelle transfer. Your immediate reaction is to text back “no,” which then prompts a call by a “bank employee” who will say they think there have been fraudulent charges on your Zelle account. They’ll tell you to send the money back to yourself, but you’ll actually be forwarding it to a phony account they have set up.
2. A thief “overpays” for something and requests a Zelle refund.
In this scam, a fake buyer says they will send you a check to cover the cost of an item you’ve listed for sale or a service you’re offering. When the payment arrives, it’s made out for more than the agreed-upon amount, and when you alert them, they suggest you just deposit the check and send the overage in the form of a Zelle transfer. Once you deposit the check, you’ll realize it’s counterfeit so you’re out that money as well as the amount of the Zelle payment you sent them as “reimbursement.”
3. You send payment for merchandise that doesn’t exist.
Maybe you’re searching for concert tickets on your local neighborhood resale site or making a down payment on a couch the seller says they’ll deliver later in the day. They may even send a screenshot of a post office receipt showing they have shipped the item, and when they ask for a payment via Zelle, it seems like an easy way to complete the transaction rather than meeting up with a stranger or mailing a check. But before long you realize the item will never arrive.
Five Ground Rules for Protecting Yourself from Payment App Fraud
While app fraud can happen to anyone, there are ways to help protect your funds.
1. Only do business with people you know.
Zelle is only recommended for use with friends and family – people whom you know and trust.
2. Treat your Zelle payments like cash.
If you wouldn’t hand over cash to someone, don’t pay them via Zelle, which is the same as cash.
3. Be alert to suspicious messages or links.
Anytime you receive a call or text from someone identifying themselves as an Old National employee – especially if you weren’t expecting it – initiate a call to the bank yourself at 800-731-2265. It’s important to use a number you find independently rather than one they send you in a link or that pops up on your CallerID as that could be a “spoof” number taking you back to the thief.
4. Don’t give out private information over the phone or via text.
That includes bank credentials or passwords unless you have initiated the call and know you’re talking to a bank employee.
5. Never return “overpayment” as a Zelle transfer.
Again, remember it is just like cash.
What To Do If You Suspect Fraud Has Occurred
Despite your caution, sometimes deception happens. Here’s what to do if you suspect you’ve been swindled.
1. Notify your bank. They may be able to help you track it down.
2. Change your user name and password on your Zelle account as well as other accounts that have the same identifiers.
3. Report the scam to the Federal Trade Commission (FTC). While they won’t be able to help you individually, they can compile your report with others to help build a case, as well as warn others of emerging schemes.
While Zelle and other cash apps can be convenient ways to conduct financial transactions with friends and family, just remember to guard those funds the same way you do your wallet. Old National is committed to helping guard against fraud. Find out more with our Security FAQs.
