Payment App Scams: What you need to know

An online dog breeder tried to deceive one woman out of her hard-earned money.

News Center 7′s Xavier Hershovitz explains how a popular app, Zelle, is partly to blame.

Lisa McClain’s dog Skye passed away in July and she wanted to get her other dog Donner a new friend.

“The other dog showed signs of being lonely and we thought let’s get a puppy,” McClain said.

She saw puppies on a Facebook listing called Florida Mini Golden Doodles. She paid the breeder a $300 deposit through Zelle via her Bank of America account, but then something unexpected happened.

“This is where he asked for the $660,” she said.

McClain said the breeder wanted the additional $660 for puppy insurance but wouldn’t let her see the puppy first.

The breeder tried to reassure her in a Facebook message, saying that he and his wife fall into a “high-risk group” and that he would never fraud anyone of their hard-earned money.

McClain said the email was flagged by Zelle and it’s a good thing. She said the email for Florida Mini Golden Doodles and another page called Texas Golden Doodles were the same. According to McClain, one was based in Jacksonville, Fl., while the other was based in Houston, Tx., with the same phone number.

“People have found ways to create loopholes in the Zelle platform,” she said.

Nev Schulman is the host of MTV Catfish. Catfishing is defined as a deceptive activity in which a person creates a fictional persona or fake identity on social media. Schulman works with Zelle to better educate consumers.

Zelle is a popular target because you can instantly transfer cash directly from a bank customer’s account.

“The effective nature of Zelle and such a widely used app gives people a false sense of safety,” Schulman said.

Zelle is owned by seven of North America’s largest banks. In 2021, customers used it for $1.8 billion payments totally $490 billion.

But the company has angered lawmakers like Sen. Elizabeth Warren.

According to a report from Warren’s office from 2020 through 2022, total claims against Bank of America more than tripled from 49,652 to an estimated 160,977 for this year. That’s a 224% increase.

Rachel Gittleman, with the Consumer Federation of America, said, “Unfortunately we’re hearing moe and more instances of fraud and scams.”

Gittleman found that many banks denied fraud claims because the consumer authorized the payment.

While credit card user would be protected in that case, consumer groups think mobile cash app-type users deserve that same right.

News Center 7 emailed Bank of America for comment, which also refunded McClain’s initial $300. A spokesperson for the bank responded by saying, “We alert clients during the transaction if they are sending money to a new recipient that they should only send to people they know and trust.”

Zelle provided the following comment “Our commitment to consumer protection is reflected in the fact that more than 99.9% of Zelle transactions have been completed without report of fraud or scam.”

As for McClain, she ended up with a dog from a reputable breeder and learned a valuable lesion – think with her hand and not with her heart. News Center 7 reached out to the puppy breeder and never heard back. Now, there is expected to be a new law this year to protect people who use Zelle-type apps.

It will require banks to payback customers who fall victim to certain kinds of scams.

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