Beware of fraud: 5 ways to use payment apps safely

In the message, a stranger asked me to send them $699 to get a “refund”. Although I immediately recognized the request as a scam, I still felt vulnerable; I didn’t see an immediately obvious way to flag the request as a scam, and with one click I could have accidentally sent this stranger a huge sum of money.

I’m hardly alone in my concerns about security when using peer-to-peer payment apps: According to a Pew Research Center survey published in September 2022, about one-third of people who use payment apps or websites say they are “somewhat or not at all sure that payment apps or websites keep people’s personal information safe from hackers or unauthorized users.” An alarming 13% of people who use PayPal, Venmo, Zelle or the Cash App say they’ve made that mistake , to send money to a scammer.

Fraud prevention experts recommend these strategies to keep your money safe.

Only send money to people you know
In general, peer-to-peer payment apps are designed to send money between friends, not strangers. If you use them to send money to someone you don’t know, you’re putting yourself at risk of fraud.

“Don’t send money unless you’ve met people in real life and know who you’re sending money to. If you do that and are careful about the number you send money to, these apps are a convenient, safe and efficient way to move money around,” says Paul Benda , vice president of operational risk and cybersecurity at the American Bankers Association, the banking industry’s trade association.

Use cash and credit cards in higher risk situations
If you need to exchange money for goods or services with someone you don’t know, the safest way is to use cash or a credit card, says Axton Betz-Hamilton, an assistant professor at Southern’s School of Health and Consumer Sciences. Dakota State University and author of “The Less People Know About Us,” a book about identity theft. For example, credit cards come with fraud protection. “I want that protection, so I don’t use those apps,” he says.

While stolen cash is more difficult to recover, it may be covered by homeowners and renters insurance policies (up to policy limits and depending on the policy).

Be careful with texts, calls or unsolicited requests
Scams are often perpetuated when scammers send a text, phone call, or other message asking you to send money, perhaps claiming that you owe a refund or that a bill is overdue.

“Fraudsters are constantly evolving at what they do,” says Joel Williquette, vice president of operational risk policy at the Independent Community Bankers of America, a trade group for community banks. This includes sending emails that are almost indistinguishable from legitimate bank emails.

Cybercriminals may pose as the IRS or the FBI and ask you to send a peer-to-peer payment immediately to settle a debt, but Williquette says legitimate agencies will never contact you via text message. or with an urgent request for money on a mobile phone.

“They usually send a letter,” he says, and don’t ask for payment via apps or gift cards—another red flag.

Fraudulent payment requests sent through a peer-to-peer payment app “are usually small dollar amounts and may even appear to be from a friend,” says Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit organization. .

Velasquez encourages people to check requests first by double-checking that they’re sending the money to the right person, adding that it’s easier to fall for scams if you’re distracted and multitasking.

Update your cyber hygiene
Enabling two-factor authentication on financial accounts, adding a PIN lock to your phone and using unique passwords that are at least 12 characters long can help keep things safe, Velasquez says.

It also recommends setting your app’s privacy settings to the most private setting to minimize the amount of publicly available information.

Flag fraud Experiments
According to PayPal, if you receive a payment request like the one I received, cancel the request without payment. You can also take a screenshot and forward it to [email protected]. PayPal adds that you should not respond, open links, download attachments, or call the phone number in the request.

If you’ve mistakenly provided any financial or personal information to a scammer, PayPal says you should immediately change your password, notify your bank, and report any unauthorized payments to PayPal. You can also report fraud to the Federal Trade Commission at reportfraud.ftc.gov, a government website that shares information with law enforcement agencies.

In my case, I followed the recommended step of withdrawing the payment request and never heard from my scammer again. With the added security measures, I will continue to enjoy the convenience of PayPal and other payment apps – and now I know what to do the next time I receive an unsolicited payment request.