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Mobile payment apps like Venmo, Zelle and Cash App offer little protection for user error

Convenience of mobile pay apps can come at a cost
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Posted at 5:10 PM, Jun 14, 2022
and last updated 2022-06-14 17:36:12-04

TAMPA BAY, Fla. — Cash is just a few clicks away with mobile payment or person-to-person pay apps. That convenience is part of the appeal for consumers like Clearwater consumer Frank Sarivola, who told ABC Action News the app is “quick and easy and so much of everything in life is automated now.”

Sarivola said he often used Zelle to send money to his college-aged son for gas and other expenses — but not anymore.

He stopped using the Zelle app in March after his son was involved in a minor accident and needed $1,500 for repairs.

Sarivola, a former law enforcement officer, said in the rush to get the cash to his son he typed in a phone number that was off by one digit.

“I put in the phone number, I transposed one number accidentally and I immediately recognized that after I hit the send button,” he said.

That one-digit mistake prompted the bank to send that $1,500 to a stranger’s account in Fort Myers. Sarivola said he was on the phone with his bank, Chase, within 3 minutes. But he said a customer service agent told him there was nothing they could do.

The unintended recipient in Fort Myers returned the money to his bank Wells Fargo. And for weeks the money remained in limbo. Leaving Sarivola worried and wondering if he would ever get it back.

Bankrate.com Senior Analyst Ted Rossman explained that Zelle is owned by a group of big banks. But the app doesn’t have any of the protections you may have from bank-issued debit or credit cards. An issue, Rossman told ABC Action News, that could only be fixed by regulation.

“It might be nice if there was some sort of waiting period there. If this person called within 2 minutes, well then they could get their money back,” he said.

After a month of waiting, Sarivola made a call for action. ABC Action News reached out to Chase via email and a spokesperson replied that they were already working on the case and hoped to have it resolved very soon.

Sarivola told ABC Action News he got immediate action.

“When you followed up with Chase within a couple of days the money was credited back to my account," he said. “It was great. Thank you very much, I really appreciate all your help.”

According to a Consumer Reports survey conducted in March, 22% of the people who have used mobile pay apps have had an issue with them. On the fraud end alone, in 2021 more than 70,000 people filed complaints with the Federal Trade Commission. The losses topped $130 million.

The Consumer Financial Protection Bureau offers these tips to improve safety and avoid risky mistakes when using person-to-person payment apps:

  • Consider having your friend send you a request for payment first
  • Double check before you press send
  • Set up your app to require a passcode, PIN, or fingerprint before making a payment
  • Contact your bank or payment provider if you suspect an error