By now, most people have heard of Zelle and Venmo, the apps that let you send money to family and friends, just by tapping a few buttons on your phone.
But many people don't realize that the convenience of these apps doesn't come with the protection you expect from a bank or credit card.
Zelleis the person-to-person (P2P) money transfer app that millions of customers of 18 different banks now use to transfer money from one smartphone to another.
"It's much faster just to login and send a payment to your colleague, than it is to send a check, wait for it to clear and make sure they've got the money in their account," Melissa Stevens of Fifth Third Bank explained when the service was launched.
The report says not all banks have set up two-factor authentication, where you have to confirm the transaction.
Also, it says cash transfers happen in seconds, making it tough to stop a fraudulent transfer, or back out of an honest mistake.
What can happen if you make an error
But what can happen if you type in the wrong phone number when transferring money?
If that number is not affiliated with a Zelle or Venmo account, you'll simply get an error message.
But if it is connected to someone's account (or one set up by a scammer), you can inadvertently end up sending them your money.
If it is your error, it can be very tough getting a refund, according to the New York Times report. Normal fraud protections that come with a credit card or PayPal account don't apply to money transfer apps.
Zelle told the New York Times it is tightening up its fraud controls.
But if you accidentally send money to the wrong person, there may be no way to get it back, so be very careful so you don't waste your money.
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