Surge in Payment App Fraud: What You Need to Know

CU Today ran an article on Jan 23, 2024, “Consumers Being Cautioned Over Surging Fraud Rates on Popular Payment Apps” that referenced information from a article, “Venmo Payment App Theft,” by Mark Morales from that same day. According to the CNN article, “the issue has gotten so out of hand in New York that Bragg [Manhattan District Attorney Alvin Bragg] has sent a letter to the popular apps demanding that they put in more security measures.” As your trusted, local financial institution, we wanted to help our members answer a few questions regarding this type of theft or fraud, and how you can avoid becoming a victim.

What does this type of theft or fraud look like?
Payment app theft can occur if you have one of these apps installed on your phone and the thief gets ahold of it while it is unlocked. A person asks to borrow your phone, you ask someone to put a phone number in for you or, it’s taken by force. The would-be thief can open a payment app with saved login credentials and send themselves funds in a few seconds.
Payment app fraud often looks like other types of fraud or scams, from romance scams to cryptocurrency and investment scams, fake Facebook Marketplace sellers, charity scams and any other scam or fraud. The goal of the scammer is always to get you to send them money now.

What makes payment app fraud different (and worse) for consumers?
One of the differences between payment app fraud and say, credit card fraud, is that by using a payment app, transactions occur almost immediately, making it near impossible to get the money back. Another issue is who authorized the transaction. According to a New York Time article, “Fraud is Flourishing on Zelle. The Banks Say it’s Not Their Problem,” [March 6, 2022 Stacy Cowley & Lananh Nguyen] many banks do not consider the transactions to be fraudulent because the victims authorized the transactions, even if they were tricked into doing so.

What can I do to avoid becoming a victim?
Refresh your knowledge of both common and current scams and fraud. Red flags include pressure to act immediately, being asked to pay before getting a product or service, being asked for personal account info, scare tactics and promises that are too good to be true. Remember the basics: never share your usernames and/or passwords, don’t carry PIN numbers or passwords in your wallet or purse, use difficult to guess passwords, and don’t save them in a browser anyone else has or could get access to.

Finally, limit the number of apps and websites you connect to your bank accounts. Bluestone FCU offers Pay Anyone, a person-to-person payment option members can use to send money to anyone, no app required. Pay Anyone has built-in fraud protections including a blocked list that blocks transactions from senders or receivers that match a fraud database, a block on sending funds out of the country, multi-factor authentication, transaction limits, a waiting period on fund availability and the ability to cancel a payment before it is claimed.


“Fraud is Flourishing on Zelle” NY Times

“Venmo Payment App theft”


Consumer Financial Protection Bureau – Frauds & Scams

National Credit Union Association Fraud Prevention Center