Charee Mobley, who teaches middle school in Fort Worth, Texas, had just $166 to get herself and her 17-year-old daughter through the last two weeks of August.
But that money disappeared when Mobley, 37, ran into an issue with Square’s Cash App, an instant payments app that she was using in the coronavirus pandemic to pay her bills and do her banking.
After seeing an errant online shopping charge on her Cash App, Mobley called what she thought was a help line for it. But the line had been set up by someone who asked her to download some software, which then took control of the app and drained her account.
“I didn’t have gas money and I couldn’t pay my daughter’s senior dues,” Mobley said. “We basically just had to stick it out until I got paid the following week.”
In the pandemic, people have flocked to instant payment apps like Cash App, PayPal’s Venmo and Zelle as they have wanted to avoid retail bank branches and online commerce has become more ingrained. To encourage that shift, the payment apps have added services like debit cards and routing numbers so that they work more like traditional banks.
But many people are unaware of how vulnerable they can be to losses when they use these services in place of banks. Payment apps have long had fraud rates that are three to four times higher than traditional payment methods such as credit and debit cards, according to data from the security firms Sift and Chargeback Gurus.
The fraud appears to have surged in recent months as more people use the apps. At Venmo, daily users have grown by 26% since last year, while the number of customer reviews mentioning the words fraud or scam has risen nearly four times as fast, according to a New York Times analysis of data from Apptopia, a firm that tracks mobile services.
Driving the surge is the apps’ ease of use. That simplicity has made it seamless for thieves to set up accounts and to send requests for money to other users, something that was not possible with traditional bank payments.