How can I recover $127 lost through an Instagram scam on Apple Pay via iMessage?

There are no scams on Apple Pay, what scammed you were people on Instagram, one of Meta (Facebook Family of apps). You sent cash (Apple Cash) to a complete stranger on Instagram, is that correct? I doubt you can recover any of the funds, but contact Instagram and tell them you got scammed on their platform.

Apple specifically tells you to only send cash to Family and Friends. It’s in the terms and conditions.

Apple Cash is serviced and issued by Green Dot Bank. Please contact an Apple Cash Specialist at Green Dot Bank. 

Contact Green Dot Bank:

• by calling (877) 233-8552,
• by mail for disputes at P.O. Box 9, West Chester, Ohio,
• by mail for general customer service at P.O. Box 1070, West Chester, Ohio 45071,
• visit www.greendot.com.

For general information about prepaid accounts, visit cfpb.gov/prepaid. 

https://applecash.greendot.com/termsconditions/

You can report phishing at these links and most importantly your local law enforcement.

• Identify legitimate emails from the App Store or iTunes Store.
• FTC Complaint Assistant
• FBI’s Internet Crime Complaint Center

Learn about how not to be a victim of Social Engineering.

Recognize and avoid social engineering schemes including phishing messages, phony support calls, and other scams - Apple Support