Manhattan DA urges multiple financial firms to combat fraud by improving their security
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According to a recent letter from Manhattan’s district attorney, several online payment services need to up their security measures in order to stop the growing rate of fraud cases. The DA has written to the companies behind the Cash App, Venmo, and Zelle, according to new reports.
We’re calling on Venmo, Cash App & Zelle to protect their users from fraud. “If there aren’t guardrails or commonsense fixes, we’re going to see more of these cases & more financial harm, possibly physical harm.” – D.A. Bragg. Watch @GMA 📺 @AaronKatersky https://t.co/GWaRfvg697
— Alvin Bragg (@ManhattanDA) January 24, 2024
A growing threat
District Attorney Alvin Bragg stated that the smartphone itself is not the most lucrative target for scammers anymore. Now, they are targeting specific parts of the users’ phones — their financial apps. He warned that users could lose thousands, or even tens of thousands, that can be drained from financial accounts in a matter of seconds, and all it takes is a few taps.
Bragg also added that there has been a growing number of thefts, especially in the New York city region. Crooks of all kinds are convincing people to hand over their phones voluntarily, but there have also been plenty of cases of criminals assaulting people or even drugging them just to gain access to their devices.
The Manhattan DA’s office’s letter provided several recommendations, such as adding a secondary, separate password for accessing the payment apps as a default option. Apart from that, he also suggested default lower limits on the monetary amount of total daily transfers, while wait times and secondary verification should be introduced if users want to make larger transactions.
He believes that not adding additional protections will leave customers’ physical and financial safety at risk. He concluded the statement by saying that he hopes the companies would accept the request to discuss potential solutions to deter scammers and protect New Yorkers and their money.
The companies’ response
While Bragg’s attempt to raise concerns regarding the rise of P2P payment apps has attracted a great amount of attention, he was not the first to do it. Last year, Senate Democrats called on financial regulators, urging them to take action against fraud related to a bank-owned service, Zelle.
Elizabeth Warren, who was among those who urged the regulators to react, said that fraud claims tripled between 2020 and 2022. During this period, Americans lost hundreds of millions of dollars to scammers.
Bragg’s letter to the mentioned providers did lead to a response from them, however. Venmo’s parent firm, PayPal, stated: “In addition to proactively leveraging sophisticated fraud detection tools, manual investigations, and partnering closely with law enforcement agencies to protect our customers against common scams, we have several options in place to enable enhanced layers of security and protection directly within our apps.”
Meanwhile, Zelle’s parent company, Early Warning Services, said that the firm has made continued efforts to build on Zelle’s strong foundation of security. A direct result of these efforts is the fact that less than one-tenth of 1% of transactions end up being reported as fraud or scams. Furthermore, the percentage continues to drop all the time.
For now, the matter remains a serious and unresolved issue, but with the pressure on the regulators growing, it is possible that some changes will soon come to the online payments industry that will, hopefully, make it harder for bad actors to rob these companies’ customers.
