How to Protect Yourself From Mobile Payment App Scams
Mobile payment apps have increased in popularity, offering a convenient way to send and receive money with your smartphone. They’re known for being user-friendly, but they can also be misused, which could leave you in a financial lurch.
Let’s dive into mobile payment apps and explore 5 quick ways to protect yourself:
What’s a mobile payment app?
Mobile payment apps let you send and receive money through your smartphone. You’ve probably heard of the most common mobile payment apps like Venmo, Zelle, Cash App, PayPal, etc.
You download the app and connect it to your bank account, debit card, and/or credit card. Then you can send and receive money through the app.
Note: Each tip below provides some protection, so use as many layers as you can.
1) Remember there are little to no consumer protections
Once you send money or once a scammer accesses your account, it’s likely the money will not be returned. So don’t use mobile payment apps to pay for things you haven’t received.
2) Only use mobile payment apps with trusted friends and family and on a trusted network
Beware of scammers posing as people you know. Even if it looks like a friend, it could be someone else. If you receive a request or message through the app, always verify it with your friend or family member directly using another form a contact like a call or text outside the app.
Also, don’t use public WIFI to log into your mobile payment app account. You should never log in to any financial account on public WIFI. You should only log into your financial accounts when you’re on a private, trusted network.
3) Limit linked accounts & link in a safe way
To link in a safer way, set up a separate, standalone bank account only for those purchases, and keep only enough money in it to cover your known purchases. Talk to your bank and ensure this new separate, standalone account will not allow overdraft or link to any other accounts or credit cards, which would defeat the purpose.
Make sure you know which mobile app accounts are linked to bank accounts. If you choose to link a bank account, utilize the tip above to reduce the risk.
Pick one or two apps and stick with those. Don’t link more accounts than necessary, and opt out of your bank automatically linking your bank account(s) to a payment app.
4) Take your time before making any payments
According to The New York Times, 12 percent of frequent payment app users reported sending money to the wrong person. Whether by accident or due to a scammer, accidentally sending funds to the wrong person can be a frustrating situation.
Before sending cash digitally, double and triple check to ensure the payment is going to the right person.
Read and understand the app’s terms of service and consumer warnings. Here’s a sample of these agreements:
- Common Scams on Venmo – Venmo
“DO NOT USE VENMO TO TRANSACT WITH PEOPLE YOU DON’T PERSONALLY KNOW, ESPECIALLY IF THE TRANSACTION INVOLVES THE PURCHASE OR SALE OF A GOOD OR SERVICE (for example, concert tickets, electronic equipment, sneakers, a watch, or other merchandise). These transactions are potentially high risk, are not allowed under Venmo’s User Agreement, and Venmo does not have a protection program for such transactions unless directly offered.” - How to Avoid Scams and Keep Your Money Safe with Cash App
“Payments are instant and usually can’t be cancelled. … No Cash App service representative will ever ask for your sign-in code over the phone, on social media, or through any other channel. Never give anyone your sign-in code.” - Understanding Fraud & Scams | Zelle (zellepay.com)
“Even if you were tricked or persuaded into authorizing a payment for a good or service someone said they were going to provide, but they didn’t fulfill it, this would be considered a scam. Because you authorized the payment, you may not be able to get your money back.”
5) If you have any doubts, don’t make the transaction
Mobile payment apps can be a convenient way to send money, but that convenience comes with risk. If you ever feel uneasy or uncomfortable with a transaction – even if you can’t quite figure out why – don’t complete the transaction. It’s better to be safe than sorry.
Many frauds and scams use similar methods to gain your trust and steal your funds. Sharpen your knowledge and learn how to spot common fraudster tactics here: 4 Red Flags to Help You Spot Fraud and Scams
Marjorie McLean is a financial counselor and educator whose favorite childhood Saturday morning activity was counting the coins in her piggy bank. As an Accredited Financial Counselor (AFC®), she is a member of the Better Financial Counseling Network and is the owner of FinancialPearl. Marjorie partners with people, providing tools, resources, and information, guiding them to take positive steps to identify and achieve their financial goals.