Manhattan District Attorney Alvin L. Bragg sent letters to various financial apps this week demanding they provide more protections for consumers.

The letters to Venmo, Zelle and Cash App follow a wave of thefts where unauthorized users gain access to individuals’ devices and drain their bank accounts.

What You Need To Know

  • Manhattan District Attorney Alvin L. Bragg sent letters to Zelle, Venmo and Cash App demanding better consumer protections

  • The letters are in response to a wave of thefts involving financial apps

  • Saying the apps are used to perpetrate crimes or fraud, Bragg urges people to never give their phones to strangers

  • He said financial apps should add protections such as two-factor authentication and lower daily transaction limits

“The apps are great. They’ve made life easier with moving money between friends and paying easier,” Bragg said in an interview with Spectrum News on Wednesday. “We want to continue to use them, just like the phones in our lives, but they come with this issue, which is that with two taps, someone could access perhaps someone’s entire life savings. We need guardrails.”

In New York, thieves gain access to cell phones through seemingly innocuous encounters, such as a ride-hail driver handing over a phone to a passenger who claims to need it to correct the navigation, or strangers in a nightclub asking to personally input their phone number on the device of someone they just met.

“A couple of taps and money goes away,” Bragg said. “We need to stop this.”

Bragg cautioned people who use financial apps to never give their phones to strangers.

To help combat financial app scams and fraud, Bragg suggested several security measures that Zelle, Venmo and Cash App can take to improve security.

He told Spectrum News that they could operate more like credit card companies, which know through data tracking if it’s unusual for a customer to move money at 3 a.m. and will reach out before approving such a transaction. He also encouraged the use of two-factor authentication, which grants access to a website or app only after a second device has verified the user.

The DA’s office also suggests imposing default lower limits on the amount of money that can be sent in a single day in case a device is stolen and a theft occurs.

In response to the DA’s letter, the largest peer-to-peer payment app, PayPal, told Spectrum News that it is “proactively leveraging sophisticated fraud detection tools, manual investigations and partnering closely with law enforcement agencies to protect our customers against common scams.”

The spokesperson for PayPal and Venmo said the companies have several layers of security and protection within their apps.

“We are aware of isolated criminal incidents described in the Manhattan District Attorney’s letter. Providing a safe and reliable service to consumers is the top priority of Early Warning Services, LLC, the network operator of Zelle®, and our 2,100 participating banks and credit unions,” a company spokesperson told Spectrum News, adding that less than one tenth of one percent of Zelle transactions are reported as fraud or scams.  

To combat fraud and scams, Zelle has incorporated in-app safety notifications and imposed limits on the amount of money that can be sent through the service. Zelle transactions with participating financial institutions that are confirmed as fraud are eligible for reimbursement, the spokesperson said.

A Cash App spokesperson told Spectrum News the company is working “proactively and diligently to safeguard our customer’s money and mitigate against the risk of fraud on our platform through a combination of preventative controls like multi-factor authentication, account transaction limits, fraud detection and consumer education.”