Steven J.J. Weisman, JD
Steven J.J. Weisman, JD, attorney in private practice and senior lecturer at Bentley University in Waltham, Massachusetts. He is author of Identity Theft Alert and founder of the scam-information website Scamicide.com.
Money-transfer apps such as Venmo can be a convenient way to pay…and an attractive target for scammers. Venmo—and similar apps like PayPal and Zelle—provide a quick-and-easy way to make and receive “peer-to-peer” payments. Need to pay a friend your share of a bill you’re splitting? With Venmo, you can do that in just a few clicks, no ATM withdrawals or checks required.
But wherever there’s money changing hands, there are scammers trying to snatch it away, and Venmo is no exception, says Bottom Line’s scam expert Steven J.J. Weisman. And while this article focuses on Venmo, in fact any of these money-transfer apps can be used for scams.
If you search online for the phrase, “Does Venmo have buyer protection?” you’ll likely find mention of the Venmo Purchase Protection program—but that protection applies only to certain purchases made using Venmo, not to money transfers. If you fall victim to a Venmo money-transfer scam, the money you lose is likely gone forever—once a Venmo payment is made, it generally cannot be cancelled or reversed…and Venmo typically does not compensate users who are tricked by scammers into transferring money. Venmo fraud victims are more likely to have their losses covered if a scammer gains access to their account and makes unauthorized transactions through no fault of the victim.
Self-defense: Link your Venmo account to a credit card account rather than to your bank account—that way you’ll be protected by credit card consumer protections if money is stolen through your Venmo account. These credit card protections are stronger than those provided by Venmo. And while Venmo charges a 3% transaction fee for credit card transactions, you could recover most of that expense by linking to a rewards card that pays 2% cashback.
Three particularly sneaky ways scammers target Venmo users…
An unexpected deposit from someone you don’t know appears in your Venmo account. A message from the person who sent the money soon follows—she transferred the money to your account accidentally…could you please send it back?
Honest people often agree to do so—it wouldn’t be right to keep this stranger’s money. But the money you received wasn’t sent by accident. It was part of a scam and was sent from a stolen credit card account. When the real owner of that account contests the charge with the credit card issuer, the transaction will be reversed and the money will be removed from your Venmo account. But since Venmo does not reverse fraudulent transactions the way credit card issuers do, if you already sent the money back to the scammer, there’s no way for you to undo that transaction and you’ll end up taking an unfair financial hit.
Self-defense: If you receive an “accidental deposit” in your Venmo account, don’t send the money back—report the possible scam to Venmo customer service and let Venmo handle the situation.
You receive a call (or perhaps a text) from someone who says he works in Venmo’s security department. This caller says Venmo has identified suspicious activity in your account and needs to verify that the account is still under your control. He says he just sent an authentication code to you via text—could you read it back to him? According to the caller, this will confirm that Venmo’s authentication codes are still reaching you and not being hijacked by a scammer.
In reality, the caller is the scammer—who has managed to get his hands on your Venmo username and password. The code you received was sent by Venmo but not as part of a special security check—it’s the code that Venmo sends as part of its normal “multifactor authentication” process whenever you log into your account. This code is designed to serve as a fail-safe—only someone who has access to your phone should be able to obtain it. But if you read the code to a scammer posing as a Venmo employee, you accidentally subvert that safeguard and the scammer can get into your account.
Self-defense: Do not provide an authentication code to anyone claiming to be a Venmo employee—real Venmo employees never request these. And Venmo almost never calls users, and in the rarest of occasions that they would call, they would absolutely not request any personal information.
A contractor you hired to do work on your home sends an urgent text—you didn’t pay his last invoice, so he’s going to stop work on your house and move on to a different project unless you pay him immediately via Venmo. Or a local merchant calls to say he has that hard-to-find item you or your spouse has been searching for—but other customers are clamoring for it, too, so if you want it, you must pay immediately via Venmo. Or a local utility calls to say your last check bounced, and it’s shutting off your service if you don’t pay right now via Venmo.
As you’ve no doubt guessed, these texts and calls actually are from scammers. That might seem obvious while reading this article, but these scams are surprisingly effective when they actually occur—the pressure to act immediately can undermine your ability to think rationally…and the call or text seems to come from a company you actually do business with and/or is about a product you’ve been shopping for.
How would a scammer know that? In some cases, these scammers choose businesses that most people in the region work with, such as a local utility. In others, they search social media to determine with whom potential victims do business or what products are of interest to them—if you post on your social media about loving a local business or trying to find a particular product, that’s an opening for a scammer. Or if the scammer lives in your area, perhaps he saw the contractor’s truck in your driveway.
Self-defense: Be extremely suspicious of any out-of-the-blue demand for immediate payment, particularly one that specifies the payment must be made using a cash-app such as Venmo (or with gift cards). They’re likely specifying a form of payment that can’t easily be reversed when you realize you’ve been had.
