Clark on Zelle, Venmo, Cashapp, etc and Howard Clark.

[Tiny]

Just because the discussions about the risks invovled with payment apps  and that the Advice from Howard Clark seems to get taken a little out of context - making it seem like Zelle is much riskier than the other apps... I thought I'd create a thread.    

First, Clark doesn't like ANY of the payment apps.  His advice is to use a separate checking account no matter WHICH app you use.   His beef with Zelle is that it's provided by banks and doesn't have as many "protections" for getting your money back as the other apps.     

As far as I can tell all of the payment apps have the same hacking risks (hence Clark's advice to set up a separate checking account for cash payments).  All of them carry the same risk for sending money to a scammer.   Zelle and the others are a lot like writing a check or more accurately handing money to someone.   Once you give someone the check or the money - it's usually gone.     

Also, these payment apps generally are intended to be used between people you know.  To transfer money to a friend or relative or a small business you are familiar with.   

FWIW:  I use Zelle to pay my quarterly HOA fees (used the official HOA email address) and to pay my lawn service using their business phone number (on their letter head, webpage, and on the monthly invoice).   I also use Zelle to transfer money to a couple of friends and a couple of relatives.  I use it on my "everyday" checking account - there's not a whole lot of money in it.  I'm not the person who keeps 10's of thousands of dollars in my checking account (I know people do that.....).   I might have second thoughts about Zelle (and be a lot more paranoid about writing a check) if I had 10's of thousands of dollars in my checking account.   I'm willing to "risk" the 1K to 3K I have in checking (and the hardship of having the account drop to 0 - for the 2 automatic payments I have set up.) 

Here's what Howard Clark says  (I don't really disagree with him... it's just the way people talk it makes it seem like any other payment app is less hackable/more secure than Zelle - and I don't think that's true). 

clark.com/personal-finance-credit/banks-banking/zelle-things-to-know/

7. Clark: The ONLY Safe Way To Use Zelle

Fraudsters are actively trying to exploit Zelle and other payment apps, so Clark advises using it only when transacting with a person you know.

In fact, on the Zelle website, it says, “You can send money to almost anyone you know and trust with a bank account in the U.S.” The “almost anyone” part means that Zelle intends this app to be used only by close associates.  But to be extra safe, Clark would rather you not use Zelle until they offer real protections. From your banking account website, he also wants you to unenroll from it.

“The banks do not care about you,” he says. “And that’s why you have to make sure this is turned off and understand the scams, stealing your money through Zelle, will keep morphing.”


Final Thoughts
Zelle is a money transfer service that makes making payments easy, but don’t expect the app or the banks to bail you out when something goes wrong.
That’s why Clark says it’s best to limit your exposure as much as possible.
“What I recommend is that if somebody wants to use Zelle or CashApp or Venmo, set up a separate checking account that has very small amounts of money in it.”
“That way, even if you are hacked, compromised or scammed, the amount of money that is at risk is really tiny, whereas if you have it with your regular checking account, all the money in it is at risk.”
And if someone calls or texts you purporting to be from your bank or another financial institution, “never trust them,” Clark says.
“You call your bank or credit union at a number that you know is valid and real on your account, and you ask them is there any activity like this that I’m getting phone calls and texts about. And you will find out, pretty much 100% of the time, that there is no such thing going on.”

[Opti]

Here's what Howard Clark says (I don't really disagree with him... it's just the way people talk it makes it seem like any other payment app is less hackable/more secure than Zelle - and I don't think that's true).

Given what I know pre-Clark and now, I do believe Zelle is less secure. And the reason is I think their model is speed so if you hit the button to send money via Zelle and screw it up, it's all on you. I think other apps may have a grace period or a couple hours in which you can correct your mistake.

So on Zelle if you fat finger or screwup someone's phone number or email address, that money be gone. You can call the bank all you want, but legally you authorized it and legally the bank can do little. Because they are not Zelle. They might be more inclined to assist you in the dispute process if they sanction Zelle, Venmo, or Cash App but that's about it. Hopefully though they will inform you what are your options. In my very limited experience, I feel Venmo is safer to use than Zelle. Because of where I work, I have had to coach people on set up for one of those and also try to get the important info when they feel they have been compromised.

Texts and emails saying your Zelle, Venmo, CashApp account are just IMO the same old crap just targeting cash apps and the fact that people now use cell phones more than laptops to transact finances. So just like responding to an email fishing for your non public personal info, it is usually you that give up your information to the scammer.

So when I answer phone calls of someone panicking, I try to find out what really happened and figure out whether the situation just needs to be monitored or whether the person who called might want to close their affected bank account and possibly reopen a new one. If you think someone has your info for cashapp X due to a text or email, its a monitor situation. The good thing about small regional banks is their process is old school so no unless its our app giving you some sort of message, we do not text, we do not email and our calls/messages should sound a certain kind of way.

[Opti]

So to kind of summarize, if you are a first-time user of Zelle, a screw up can result in instant missing money unless of course the incorrect phone number or email address you put in does not exist at all.

For people who start using the app with both people present when setting it up, yes the risk might be almost identical. This is almost never true of bank customers who ask for the banks help in setting things up or are looking to see "what went wrong".

Tiny your usage is different than most of the customers I have handled, often rental(leases) or used car purchases that require payment by Zelle/Venmo. Often non-customers are helping a customer as well on these transactions who might lose all or most of their money if the transaction is a scan. No pressure.

You can also limit your exposure simply by the financial institution you choose, and he does mention that. So large big banks are more exposure but also more tools. IDK. I personally have had the habit except for general CCs, to go with smaller regional banks or credit unions. And then there is internet only banks, hybrids and international banks.

[gs11rmb]

My 'beef' with Zelle stems from Bank of America simply adding it onto my account without permission.  A scammer then used it to send themselves $1,980 to somewhere in Eastern Europe.  BoA had the audacity to claim that I had authorized the transaction.  After filing a police report, they still refused to refund the money.  After some advice from this board, I filed a formal complaint with the Consumer Financial Protection Bureau and they quickly returned the funds while refusing to acknowledge they did anything wrong.  I closed my account and will never use Zelle.

[resolution]

I think the main issue with Zelle was #2 on the list, the fact that transactions can't be cancelled and that only 47% of the people with unauthorized transactions were ever refunded. There are a lot of account spoofing scams where it looks like you are sending it to a different account. It just takes one bad decision made on a bad day for someone to drain your bank account.   www.aura.com/learn/zelle-scams

I don't use any payment apps on my phone, but that is mostly because my phone is too old to support my bank app.

[Opti]

Aug 8, 2024 9:39:32 GMT -5 gs11rmb said:

My 'beef' with Zelle stems from Bank of America simply adding it onto my account without permission.  A scammer then used it to send themselves $1,980 to somewhere in Eastern Europe.  BoA had the audacity to claim that I had authorized the transaction.  After filing a police report, they still refused to refund the money.  After some advice from this board, I filed a formal complaint with the Consumer Financial Protection Bureau and they quickly returned the funds while refusing to acknowledge they did anything wrong.  I closed my account and will never use Zelle.

Oh no. Was BOA the large bank that recently had a settlement? Customers were being signed up for services they did not ask for by employees looking to make extra money or hit quotas.

Or it could be a scammer that social engineered that on to your account and BOA does not want to admit fault. Small banks hopefully know you personally so the branch or back office might catch it, just because it looks wrong. GS hates apps and electronic payments. Why would he sign up for Zelle? Oh look, money went out of the US to country EE... looks like a scam. And at my job that would set things in motion with someone trying to contact you to confirm this is indeed a scam or that you did actually authorize it.

[resolution]

Aug 8, 2024 10:19:05 GMT -5 Opti said:

Or it could be a scammer that social engineered that on to your account and BOA does not want to admit fault. Small banks hopefully know you personally so the branch or back office might catch it, just because it looks wrong. GS hates apps and electronic payments. Why would he sign up for Zelle? Oh look, money went out of the US to country EE... looks like a scam. And at my job that would set things in motion with someone trying to contact you to confirm this is indeed a scam or that you did actually authorize it.

So one of the scams is a text message or phone call that spoofs the bank caller ID, telling you that a large payment just went out and asking you to confirm if you sent it. If you respond to the text, they tell you that the bank is sending you a pin number to verify your identity, and to respond with the PIN number. The PIN number is really legit being sent by the bank, because the scammer is trying to log onto your bank account while this is happening. If you give them the PIN to "verify your identity", you just gave them the PIN to access your bank account and then they transfer out your money.

[gs11rmb]

Aug 8, 2024 10:19:05 GMT -5 Opti said:

Aug 8, 2024 9:39:32 GMT -5 gs11rmb said:

My 'beef' with Zelle stems from Bank of America simply adding it onto my account without permission.  A scammer then used it to send themselves $1,980 to somewhere in Eastern Europe.  BoA had the audacity to claim that I had authorized the transaction.  After filing a police report, they still refused to refund the money.  After some advice from this board, I filed a formal complaint with the Consumer Financial Protection Bureau and they quickly returned the funds while refusing to acknowledge they did anything wrong.  I closed my account and will never use Zelle.

Oh no. Was BOA the large bank that recently had a settlement? Customers were being signed up for services they did not ask for by employees looking to make extra money or hit quotas.

Or it could be a scammer that social engineered that on to your account and BOA does not want to admit fault. Small banks hopefully know you personally so the branch or back office might catch it, just because it looks wrong. GS hates apps and electronic payments. Why would he sign up for Zelle? Oh look, money went out of the US to country EE... looks like a scam. And at my job that would set things in motion with someone trying to contact you to confirm this is indeed a scam or that you did actually authorize it.

It was probably 5 years ago now that it happened.  I think I was angrier at the bank than the scammers.  I had never used the app.

ETA:  well, not even the app.  It was a 'service' that was added to my bank account.

[Opti]

Aug 8, 2024 10:41:48 GMT -5 gs11rmb said:

Aug 8, 2024 10:19:05 GMT -5 Opti said:

Oh no. Was BOA the large bank that recently had a settlement? Customers were being signed up for services they did not ask for by employees looking to make extra money or hit quotas.

Or it could be a scammer that social engineered that on to your account and BOA does not want to admit fault. Small banks hopefully know you personally so the branch or back office might catch it, just because it looks wrong. GS hates apps and electronic payments. Why would he sign up for Zelle? Oh look, money went out of the US to country EE... looks like a scam. And at my job that would set things in motion with someone trying to contact you to confirm this is indeed a scam or that you did actually authorize it.

It was probably 5 years ago now that it happened.  I think I was angrier at the bank than the scammers.  I had never used the app.

ETA:  well, not even the app.  It was a 'service' that was added to my bank account.

Certain banks expect their front line tellers and others to sell a certain amount of services per month and per year. It IMO justifies paying tellers less than they deserve to encourage hustle, customer engagement etc. Much like Mayc's salespeople and others have to push store cards to keep their jobs and hit certain quotas.

So enterprising souls have signed up people they should not have, and you should be mad. Hopefully they were fired or had a warning added to their file at the very least. I doubt that BOA changed their compensation approach though to discourage this behavior by employees by paying a better wage and lessening the basket of products that they are expected to promote.

The other one, can be tricky. Social engineering scammers can be very good at answering all the Qs because they may have practiced on various different branches b4 scoring an employee who believes them. The employee indeed would have authorized Zelle. However, it was totally the choice of the scammer as to how much they thought they could lift from your account. On the plus side though, since the amount was over $100, it probably made it easier to settle and get money back versus if it had been a more usual probe of say $50 or something far more common for a first time Zelle.

[Opti]

I do want to add is you can reduce your attraction to spammers by limiting your charitable donations to organizations you know and trust. I think you should never say yes to a phone solicitation even if you think its your local PBA.

Mailing checks to organizations allows them to access your bank's routing # and your account #. These checks do get intercepted in the mail and washed. And even if they are cashed and deposited, if it is a scam organization that info must be put on a spreadsheet for later use. When scam organization shuts down because the state or feds are on to them, they can use that info another way. Or just call you again with the new organization name which sounds good cuz you like supporting the police, firemen, animals in need yada yada. If you don't do your research bad scam fake charity will research you. And see what pockets you might have to pick and proceed accordingly.

[greeniis10]

Aug 8, 2024 9:39:32 GMT -5 gs11rmb said:

My 'beef' with Zelle stems from Bank of America simply adding it onto my account without permission.  A scammer then used it to send themselves $1,980 to somewhere in Eastern Europe.  BoA had the audacity to claim that I had authorized the transaction.  After filing a police report, they still refused to refund the money.  After some advice from this board, I filed a formal complaint with the Consumer Financial Protection Bureau and they quickly returned the funds while refusing to acknowledge they did anything wrong.  I closed my account and will never use Zelle.

Wells Fargo did the same thing. They kept putting pop-up messages on the app every time you signed in to say it was "coming soon" (however long ago that was, I don't remember) and then all of the sudden the "You're ready to transfer money with Zelle!" message appeared. Yeah, adding it without permission and then attempting to pass it off as "safe" since it was owned or controlled by the banks or whatever was ridiculous. I promptly unenrolled and thankfully haven't had any issues since. I keep a close watch on all my accounts, though.

[The Walk of the Penguin Mich]

My sister and her kids Venmo money frequently back and forth.  I have only used Zelle, since it is supported by USAA and only to TD in his USAA account.  

[Rukh O'Rorke]

I'm not really understanding the risks.

Is it only if you fall for something? Is it hackable without yout input? If you use it for a small vendor, can they somehow lift info for a sccam later?

[Tiny]

Aug 8, 2024 18:23:29 GMT -5 Rukh O'Rorke said:

I'm not really understanding the risks.

Is it only if you fall for something? Is it hackable without yout input? If you use it for a small vendor, can they somehow lift info for a sccam later?

ADDED:  I agree there is a risk involved.  I just don't think it's any worse then my friend walking around with $500 in cash in her purse because she's afraid of Credit Cards  for example.  For her a Credit card is riskier than having her purse stolen or lost. 

As far as I can tell the majority of money loss via Zelle is you willingly sending money to a scammer. There seems to be something where if your phone is stolen OR maybe a hacker has some way to access your phone's sim card that can also give a hacker access to your accounts maybe via the apps on your phone or to get texts for 2 factor authentication??  They'd still have to get into your bank webpage and set up the zelle transfer  you can't set up a zelle transfer outside of logging into your bank's webpage.  Zelle is a little like a "bill pay" - you have to set up the recipient and then schedule a payment.    

FWIW: I've had to set up people to receive Zelle payments from me over the past 18 months.
I fatfingered my nephew's email address and Chase could NOT verify it during the set up process.
I also used the wrong phone number when trying to pay a small home business owner for their product. Chase could NOT verify the phone number during the set up process.

Once I got the right email (and phone number) the verification process returned a name for email and and a name for the phone number. The names matched what I was expecting (my nephew and a friend of a friend's name) this took a few minutes to happen. 

I then zelle'd my nephew $50.00 (out of the 1K I needed to send him) as he had never used zelle before and I wanted to make sure beyond a shadow of a doubt that he was the recipient. He got the $50.00 (I got a confirmation he got it) and I then sent him the rest of the money. I just zelle'd the $35.00 to the small business. If it went astray and I lost the money I would just deal with it. It went through and all was good.

My nephew can't pull money from my account via Zelle - even though I sent him money. He didn't see my zelle contact info (my phone number or email address) on the transactions on his end. I assume the small business (friend of a friend) didn't see my info either - my phone number or email address associated with my Zelle account).

I'm not sure how someone would pull money from my account with a zelle transaction that's created behind the scenes IF they didn't have access to log in to my account and set up the transfer. It's a push from my bank to another bank. Not a pull from someone at another bank from my account. OK, if they've hacked into my bank and into my account and get past the 2 factor authentication (someone access the pin number sent to phone - either because they have rerouted my phone to theirs OR I literally tell the pin number. ) then they can take my money. 


FWIW: if I use Zelle with my S&L or with Chase (I have two phone numbers and two email addresses and that's why I can use zelle with two different banks) the transfer forces me to wait for verification of a newly set up person. And I see some info about the new set up - the person's or business's name. the transfer process keeps reminding me to be careful of scams/fraud and to be careful of who I send money to. The process also lets me set up a transfer for a future date - so I could go back and cancel the transfer if I have second thoughts.