CEDAR RAPIDS, Iowa (KCRG) – The Better Business Bureau has said that there is a loophole in a federal law called the Electronic Funds Transfer Act, which prevents people from recovering funds lost in scams.
Federal law, which was passed in 1976, may help some scam victims recover money lost in the scam. This can even apply in some cases where someone has authorized a transfer to a scammer. However, the law does not apply to payment apps like Venmo or Zelle.
The loophole makes it harder for people, like Colby Kos, to get reimbursed after using these apps to pay crooks. Kos said he received a text and a phone call from someone posing as Wells Fargo. She said the man on the phone told her someone else was trying to transfer funds from her account and she needed to send money to another account using Zelle.
âHe was very convincing, he knew all the ins and outs and he was sending confirmation numbers to my phone from Zelle one way or another,â Kos said.
For example, Kos stated that she sent the account a wire transfer of $ 1,000 because she was afraid that someone else would gain access to her account. Then the app prevented her from sending more money to another account.
“So the guy hung up on me and I was like, ‘Oh no,'” she said.
Wells Fargo, which is Kos’s bank and partly owns Zelle, said it could not speak about its investigation for reasons of confidentiality and is continuing its investigation. The bank sent a notice to Kos, which was reviewed by i9, stating that it had authorized the transfer through the app.
Bobby Hansen, regional director of Cedar Rapids Better Business Bureau, said payment apps like Zelle, Venmo, Paypal, and CashApp are perfect payment tools for scammers. He said people should treat money on services like cash.
“A bank or credit union will never call to request sensitive information, and it will not ask a consumer to transfer funds between accounts,” Hansen said. âConsumers must hang up and call their bank or credit union at the telephone number on the back of the card issued by their financial institution. “
He also said people should only use these apps for payments to friends and for linking accounts to debit or credit cards, which are protected against fraud.
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