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Look Out For These 4 Fintech Scams

Look for information about the fintech company online.

Fintech makes our lives easier. If you’re out at the farmer’s market with no cash in your running shorts or you’re splitting up a bizarrely complicated restaurant bill with 8 friends, it can solve a lot of problems. By simply clicking an app on your phone or watch, you can conduct financial transactions on the go wherever you are. Unfortunately, Fintech has also opened up a new wild west for creative scammers. If you’ve experienced the pain of a fintech scam or attempted fintech scam online, you can relate to how infuriating this is. 

These are fintech scams on the rise that you need to be aware of so you can stay safe online.

Zelle Scams on Facebook Marketplace 

So you finally got around to listing that cat tree your pet is too senior to climb and you’re hoping to make a few bucks and find it a good home. 

The next thing you know someone wants to know if it’s available and they tell you to text them. 

Well, that’s your first red flag. Scammers are contacting sellers on Facebook Marketplace expressing interest in an item and offering to pay with Zelle. They trick the seller into providing their email or phone number needed to set up a Zelle account linked to the seller’s number. This lets them conceal their identity when scamming others.

How it Works

Buyer insists on paying by Zelle, asks for seller’s email/number to “send payment,” sends fake confirmation emails, asks seller to “refund” fake upgrade fee.

Scammers often use high-pressure tactics to manipulate individuals.

Red Flags

The scammer insists on making the payment via Zelle, requesting contact info to “send payment,” fake payment confirmations.

How to Avoid 

  • Don’t provide contact info.
  • Complete transactions within platform messaging
  • Confirm payment has posted to your account before shipping item.

One marketplace scam growing in popularity involves a fake email appearing to be from Zelle, claiming that a transaction cannot be completed until your Zelle account is upgraded. In reality, the scammer is tricking you into paying them for an upgrade that doesn’t exist.

How can you tell if an email was sent by a scammer?

To spot a scammer’s email, remember that Zelle only communicates from @Zelle.com or @Zellepay.com. 

Be cautious of emails from common domains like @gmail.com, @aol.com, or @yahoo.com, even if they feature the Zelle logo. Always verify the sender’s domain by expanding the “To” and “From” fields in your email, which may require clicking an arrow or ellipsis depending on your email service. If you’re uncertain, consult your email provider’s support for guidance.

Learn the terms and conditions of payment apps before using them. If someone says you need a business account to accept payments, you can be sure this is a scam. 

Inform Facebook Marketplace about scams. It’s best to report a seller who attempts to scam you. Your report may save the next victim a lot of aggravation.  

Facebook Marketplace Venmo Scams & Craigslist Venmo Scams

Venmo’s lack of a chargeback system and buyer protection policies makes it an attractive platform for scammers, especially in informal sales like those on Craigslist or Facebook Market. These scammers often pretend to sell goods or services, take your money, and disappear, as Venmo transactions offer no recourse for the buyer once the payment is made.

For sellers, accepting payments through Venmo comes with risks. Venmo itself advises against using the app for informal sales. While payments received might instantly appear in your account, giving the impression of a completed transaction, this can be misleading.

Here’s the catch:

A buyer can dispute a payment with Venmo or even use a stolen credit card for the transaction. If the legitimate cardholder reports unauthorized activity, the payment could be reversed. This leaves you, the seller, without both the money and the item you sold, as Venmo won’t cover your loss in such scenarios.

The Venmo texting scam

This involves a trick known as smishing, aka phishing over SMS.

In these scams, fraudsters impersonate Venmo and send alarming texts claiming that your account will be charged unless you log in to reverse the action. The urgency of these messages often prompts victims to click on the provided link and enter their login details. However, this link is a fake portal designed to steal your personal information. Once the scammers have your credentials, they can access your funds.

To stay safe, be skeptical of text messages that:

  • Originate from a dubious domain.
  • Contain shortened links obscuring the destination.
  • Have typos in the URL.
  • Arrive unexpectedly via DMs, emails, or texts.

If you suspect any unauthorized activity on your Venmo account, always verify through the official app or website, rather than through links in texts or emails.

The Money Transfer Scam

The money transfer scam, highlighted by the Better Business Bureau, targets users of various digital wallets like Venmo, PayPal, Cash App, and Apple Pay.

In this elaborate fintech scam, scammers link stolen credit card information to a Venmo account and transfer funds to unsuspecting users, claiming it was a mistake. They rely on your goodwill to return the money. However, before you initiate the refund, they switch the stolen credit card details with their own, ensuring any returned funds go directly to them.

Once the actual owner of the credit card notices the unauthorized transaction, they’ll likely contact their bank to reverse the charges and block the card. This leaves you in a bind because the reversed funds are withdrawn from your account.

Venmo and similar platforms often can’t reverse these transactions once the original card is blocked, meaning you may lose your money with little chance of recovery. Unlike credit cards, which typically offer fraud protection, many digital wallet services do not provide the same level of security against such scams.

What To Do If You Have Been Involved in a Zelle Scam 

Because you authorized the payment, you may not be able to get your money back. A few types of scams reported involve purchasing tickets, buying puppies and other financial scams like cash flips.

Reach out to your bank or credit union for assistance.

If you suspect you’ve fallen prey to a scam or fraudulent activity, it’s essential to get in touch with your bank or credit union without delay. You may have specific legal rights and protections in situations of unauthorized transactions, as outlined under the Electronic Funds Transfer Act, commonly referred to as “Reg E.”

If something feels off or too good to be true, it probably is.

What To Do If You Have Been Involved in a Venmo Scam

In the face of a scam, staying vigilant and proactive is crucial. Scammers often employ social engineering and deceptive tactics, making it difficult to recognize their true intentions. If you find yourself a victim of a scam, here’s a practical course of action:

  • Report phishing scams or impersonations of Venmo employees immediately. If this happens on Paypal, send the report to [email protected].
  • If you suspect unauthorized access to your Venmo account or are unable to access it, reach out to [email protected] for assistance.
  • In cases where your Venmo account is linked to your credit card, contact your bank to inquire about reversing any unauthorized charges.
  • Notify your local law enforcement authorities about the scam to help prevent future occurrences.

While Venmo offers convenience, it’s important to note that it may not always provide the highest level of online security. Stay informed and protect your financial information diligently.

Navigating the digital financial landscape requires both awareness and caution. As fintech evolves, so do fintech scams. Being informed about these common scams is your first line of defense. 

Remember, vigilance and skepticism are vital tools in protecting your finances online. Always double-check sources, avoid sharing personal information, and consult your financial institution if you suspect fraudulent activity. By staying alert and informed, you can enjoy the benefits of fintech while safeguarding your assets against these modern-day digital threats.

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