Be Aware of Payment App Scams

Written by Kevin Guenthner, CIO

Payment apps have made life easier for all of us and when used properly can be a safe and efficient way to exchange money with others in your circle. While easy and convenient, payment apps need to be managed carefully. P2P apps are designed to help facilitate simple financial transactions between people who know and trust each other, like sending utility payments to a roommate or splitting the check at dinner. Today, more and more people are also using these apps to  purchase goods or services from parties they may not personally know first-hand. 

The apps have certainly made life easier, but it is important that users take care to ensure they know who they are transacting with and that they use the correct information when setting up the payment.  Would you hand $100 in cash to someone you don’t know and watch them walk away? Of course, you wouldn’t!  But as more and more people turn to person-to-person (P2P) payment apps like Venmo, Zelle and CashApp, scammers are taking advantage of the quick, easy and often anonymous access to cash they provide.

Even a legitimate transaction can go wrong by entering an incorrect phone number or misspelling a recipient’s name. If the payment is sent to the wrong person  it is extremely difficult to get it back.   You may be told:

  • They’re from a local charity and need a donation for a special cause.
  • You won a prize or a sweepstakes and need to pay some fees to collect it.
  • A loved one is in trouble and they need you to send money.
  • You owe taxes to the IRS.
  • They’re from tech support and need money to fix a problem with your computer.
  • They're someone who is romantically interested in you and needs some money.

You can protect yourself from inadvertently sending money to the wrong person or  becoming a victim of payment app scams by taking time to ensure that you know who you are transacting with and that the information is accurate..  Here are some tips:

  • When you get a call, don’t believe caller ID. If the caller says they represent a company, your bank or a government agency, hang up and call the phone number on your account statement, in the phone book, or on the company's or government agency's website to verify the authenticity of the request.
  • Never send P2P payments to - or accept payments from - someone you don't know. Research and validate all requests for money transfers.
  • Don’t provide goods or services to anyone before receiving payment.
  • Be wary of any business that only accepts P2P payment apps or pre-paid debit card payments. Consider this a red flag.
  • If someone tells you that they sent you money by mistake, tell them to cancel the transaction. It is likely a scam if the person refuses to do this.
  • If you receive an unexpected email or text message asking you to send money, do not click on any links. Log into the app to see you have any requests for money.  If you don’t, it’s most likely a scam.
  • Never give anyone account or other personal information, including passwords, via phone, text or email, unless you independently can verify their identity.
  • Use two-factor authentication with all financial accounts.
  • Review the app's fraud protection policies and understand whether and how you can recover funds if a problem arises.

If you think you are a victim of a P2P app scam, contact your credit card, bank, or credit union right away.  You should also report the scam to the mobile payment app.