Payment apps or services led other methods, including credit and debit cards, in terms of losses cited in the consumer fraud reports last year. Median individual losses for that category were $380, ahead of credit cards at $136 and debit cards at $110, the post said.

Credit cards were more commonly used to pay scammers, with the FTC receiving about 114,000 complaints for that method in 2023, followed by debit cards at about 83,000 and payment apps or services at about 65,000, according to public data from the Commission.

Credit cards have been the most reported payment method for paying scammers since 2020, the FTC’s data show. That year coincided with the onset of the COVID-19 pandemic, which led consumers to make e-commerce payments more often. While debit cards and payment apps had been neck-and-neck as the second most common method, debit cards decisively pulling ahead in 2022, according to the commission data.

When consumers pay a scammer with a credit card, debit card or payment app it is “most often going to be payments on online shopping type fraud,” said Fletcher. That type of fraud involves a consumer clicking on an ad and making a purchase on a fake website for goods that never arrive, she said.

Fletcher did note that while cards and payments apps were the most reported methods used to pay scammers, bank transfers and cryptocurrencies were far ahead in terms of total dollar losses reported by consumers in the first quarter of this year, echoing that trend from last year.

“There are some payment methods that in and of themselves can be a red flag for fraud. If someone is insisting you go to a store and buy gift cards and read the numbers off the back, it's a scam,” Fletcher said. “People are being told to buy cryptocurrency or take out cash, load it into a Bitcoin ATM machine. Again, red flag for fraud.”

Overall, payment fraud is on the rise in the U.S., with the Federal Trade Commission reporting in February that 2023 fraud losses were over $10 billion, a 14% increase year-over-year. 

In a statement, Zelle owner Early Warning Services said that it had received fraud reports for “less than one tenth of one percent (.1%) of transactions” on the service. “As of June 30, 2023, we expanded our network operating rules to require all participating financial institutions to reimburse consumers for certain qualifying imposter scams,” the statement said.

Fletcher declined to comment on why the FTC has not previously published data on which payments apps were most commonly used to pay scammers, and whether the agency would publish such data in the future. 

Spokespeople for PayPal, Cash App, Venmo and Apple Pay did not immediately respond to questions about being listed in the FTC post.

By James Pothen on June 4, 2024
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