Oregon Attorney General Ellen Rosenblum co-led a bipartisan letter from 33 Attorneys General to Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB) calling for stronger consumer safeguards for money sharing platforms and apps.
Popular payment apps include Apple Pay, Venmo, Square, Zelle, and others. The Attorneys General highlight a rise in consumer complaints related to these payment platforms, especially complaints from consumers about difficulties reaching customer service representatives, inability to retrieve funds, and fraudulent money transfers by third party scammers. These payment platforms are sometimes marketed as a solution for consumers without access to traditional banks, even though these apps are not considered a bank.
“Especially during the pandemic, consumers have depended on payment apps as a virtual and safe way to send money quickly,” Rosenblum said. “But as these platforms explode in popularity, so does the chance of being scammed and defrauded. As our letter urges, it is particularly important these platforms employ safeguards to protect consumers from fraud, and provide better customer service when things go wrong.”
The letter addresses three major issues: customer service, account access, and third-party scams. Highlights from the letter include:
Issue 1: Customer Service
Complainants say that they can’t contact customer service representatives, and, when they do, they face long hold times or never reach a human representative. A customer service email address or chat function is often difficult to find or requires navigating multiple layers to access. Speaking directly with a customer service representative is an important feature that is still desired by many, and one that should not be overlooked even with advances in technology.
Issue 2: Account Access
Other complaints focus on consumers’ inability to access or transfer money, including funds directly deposited into their accounts by their employer or the government, e.g., paychecks, unemployment benefits, and CARES Act funds. Such issues prevent consumers from using their own funds, and these problems are exacerbated by not being able to connect with customer service. Consumers may be locked out of their accounts without warning or explanation, or because the consumer has a problem with their email address or phone number, and the consumer may be left without any further recourse.
Issue 3: Third-Party Scams
Many consumers have been scammed out of hundreds or thousands of dollars by other users of these payment platforms. Scammers are attracted to real-time payment platforms, in large part, because they do not need to reveal their true identity to set up an account. The complaints describe a wide range of scams. In some, third parties contacted consumers through social media offering investment opportunities or prize entries in exchange for payment.
In others, scammers pose as family members and request money from unsuspecting consumers. In some cases, fraudsters take advantage of the platforms’ limited customer support systems. Because it may be difficult to find contact information for customer service, many consumers resort to trying to find a phone number through an internet search. This leads to consumers encountering fake customer service phone numbers, which direct consumers to scammers who engage in tech support scams.
The perpetrators of such scams offer to assist consumers for a fee (processed through the payment platform) or convince the consumer to allow them access to their device or their account, allowing the perpetrator to quickly drain the account of funds.
The Attorneys General letter
If you believe you have fallen victim to a payment app scam, report the fraudulent transaction to the company behind the money transfer app and ask if they can reverse the payment. If you linked the app to a credit card or debit card, report the fraud to your credit card company or bank. Ask if they can reverse the charge.
You can also report the scam to the Oregon Attorney General’s Office online at www.oregonconsumer.gov.