Manhattan’s district attorney has urged the companies behind Venmo, Zelle, and Cash App to enhance their security measures due to a rise in fraud incidents. District Attorney Alvin Bragg stated, "No longer is the smartphone itself the most lucrative target for scammers and robbers—it’s the financial apps contained within." He emphasized that significant amounts could be quickly drained from financial accounts with just a few taps.
Bragg highlighted an increase in thefts in the New York City area, noting that criminals are convincing victims to relinquish their phones or resorting to assault or drugging to gain access. This concern regarding peer-to-peer (P2P) payment apps is not new; last year, Senate Democrats, including Elizabeth Warren, requested financial regulators to address fraud associated with the bank-owned Zelle service. Warren reported that fraud claims had tripled from 2020 to 2022, costing Americans hundreds of millions of dollars.
In a letter to the financial firms, Bragg proposed several recommendations, including defaulting to a second password for accessing payment apps, setting lower daily transfer limits, and implementing wait times and secondary verification for large transactions. He stated, "Without additional protections, customers’ financial and physical safety is being put at risk. I hope these companies accept our request to discuss commonsense solutions to deter scammers and protect New Yorkers’ hard-earned money."
PayPal, the parent company of Venmo, responded by saying they utilize sophisticated fraud detection tools, conduct manual investigations, and collaborate closely with law enforcement to protect customers from scams, while also offering enhanced security options within their apps. Zelle’s parent company, Early Warning Services, claimed that due to their ongoing security efforts, less than one-tenth of one percent of transactions are reported as fraud or scams, with that figure decreasing.
In Brazil, the central bank was compelled to impose spending limits on its new PIX instant payments platform in response to a surge in "lightning kidnappings." Following the launch of PIX, São Paulo experienced a 40% increase in these kidnappings, where individuals are abducted and forced to transfer money for their release.
Learn more about payments at NextGen Nordics on April 23, 2024.