Protecting Yourself from Mobile Payment App Fraud
by A. Scott White, CFP®, ChFC, CLU
President, Scott White Advisors
Online scam trends often follow consumer purchasing trends and, right now, the hot transaction spot is Peer-to-Peer (P2P) mobile payment platforms like CashApp, Zelle, or Venmo, according to a recent MacAfee post. With the increase of P2P payments during the pandemic, scammers seemed to follow suit and joined the action as well. But sending or accepting money via a mobile payment app is not all bad. Often the convenience does outweigh risks—as long as you know how to protect yourself and your assets.
Wondering what peer-to-peer fraud is, exactly?
OnPoint Community Credit Union spoke with Maryann Miller, Fraud Executive at Actimize, who has been warning for years, “As payment speeds increase, fraud increases. It’s just that simple. You can’t underestimate how quickly and completely fraudsters will attack real-time payments. They are not just going to attack the payment product itself, but everything else in the environment including registration, authentication, loading bank information or any loophole they can find. When they find it, they’ll hit it continuously until discovered.”
Here are some of the common threats you might encounter:
- Application fraud (stolen identities)
- Consumer scams
- Smishing scams (text message scams)
- 2-Step authentication thief
- Account takeovers
P2P platforms are very convenient; however, this means that you need to be careful that simplicity doesn’t lead to complacency with your financial security. One reason scammers like P2P apps is the lack of user security offered, since many do not offer refunds. However, many of the apps do bar people with personal accounts from using it to buy or sell goods with other personal account holders. If you lose money to a transaction that is barred, the app isn’t required to help you recover funds. It is advisable to not keep funds in these accounts long-term because, unlike most bank accounts, they are not FDIC-insured.
How to Avoid P2P Fraud and Payment Scams according to Consumer Reports
- Send money only to people you know. Many peer-to-peer transactions are instantaneous and irreversible, a fact that scammers know and exploit.
- Don’t use P2P services for business purposes. The terms of service for most apps prohibit the use for purchasing goods and services. Look instead for a payment app specifically created for business users, like Square Cash for Business or PayPal (though not the Friends and Family option).
- Search the app for customer service contacts and procedures before you use it. That way you’ll know where to go and what to expect when you need help.
- Keep your app up to date. If you have old software, you’re missing the latest security patches.
- File a complaint. Companies accredited by the Better Business Bureau, including Venmo and Zelle’s operator, Early Warning Service, are required to respond to consumer complaints, says Katherine Hutt, a spokesperson for the bureau. You also can lodge a complaint with the Consumer Financial Protection Bureau’s Consumer Complaint Database. The organization’s policy has been to report problems to companies for them to resolve.
MacAfee also suggests locking your app for extra security and adjust privacy settings specificity.
When it comes to fraud, vigilance is our number one weapon. You have the power to protect yourself and your loved ones from scams.
To report a scam or for help if you or a loved one has fallen victim, you can contact the AARP Fraud Watch Network Helpline. Call 877-908-3360.