The rise of peer-to-peer mobile payment apps like Venmo and Cash App has made them an attractive target for thieves and scammers who use a variety of methods to steal money from users. However, if you use these apps or similar ones, there are easy ways to protect yourself and your funds.
For those unfamiliar with this family of apps, a mobile payment app allows you to send and receive money instantly to another person. There’s no need to deposit checks or wait for them to clear your bank. You don’t need to carry cash with you either. Say you’re out to dinner with a group of friends and your group wants to pay individually but doesn’t want to hassle their server with separate checks. In this case, one person pays and the others send their share of the bill from their phones right to the person who paid the total bill. As long as everyone has a payment app, instant repayment neatly avoids the potentially awkward situation of reminding friends they owe you money days or weeks after your dinner.
Downloading these apps is free and takes only a minute or two to link your Venmo or Cash App account to your bank account as you would with Uber, Instacart or any of the popular apps that are well on their way to turning us into a cashless society. When you receive funds, you can leave the money in your account or transfer it to your linked bank account. The transaction is free if you don’t mind waiting up to three days or just a quarter if you want an immediate deposit. A record of your transactions is stored in the app.
The convenience of payment apps will not be news to you, especially if you are a younger consumer. According to the Consumer Financial Protection Bureau, 85% of Americans aged 18 to 29 have used a payment app. Transaction volume across all service providers in 2022 was estimated at approximately $893 billion and is projected to reach approximately $1.6 trillion by 2027, CFPB said.
Last June, the CFPB issued a statement warning that money held in a payment app may not be federally insured. It advised users to transfer their balances into their bank accounts where funds are insured through the FDIC. If an app were to face bankruptcy, it would be difficult to retrieve your money if it was sitting in the app. So there’s the first rule to keep your money safer: Regularly transfer app balances to your linked bank account.
Thieves may try to steal your phone to access your mobile payment apps. The most important safeguard you can take is to set your phone to lock automatically after a short period of inactivity when you’re using your phone outside of your home, either 30 seconds or one minute. You’ll find this option by going into “Settings” then “Display & Brightness.” Open “Auto-Lock” to change the time.
Take it a step further by requiring your payment app to be accessed only with Face ID or your passcode. You will first activate this feature in the payment app’s settings by toggling on “Enable Face ID & PIN.” This action will add the payment app to a list of apps in your phone under “Face ID & Passcode.” You may have to restart your phone to see the new app. Set this up for any financial or otherwise sensitive app on your phone.
Finally, always log out of your mobile payment app after each use. This way, even if someone takes or borrows your device, they can’t access your mobile payment app without your approval.
Scammers are also targeting payment apps in two different ways: through external communication such as an email or phone call and from within the app itself. Like with any phishing scheme, be aware of offers that sound too good to be true. They may involve a windfall tax refund, a cash prize or something else exciting that you were not expecting. Similarly, it could be a request to settle a debt. The sender may ask you to provide your pay app login credentials or ask you to send money to verify your account. No legitimate entity will ever ask you for login details, access codes or to send money via an app. Report the scam to your bank, the platform’s security team and the Federal Trade Commission.
Before you send money to a friend, make sure you are sending it to the correct account. With so many people using these apps, it’s easy to send payment to the wrong person. If you’re together, ask your friend to pull up their account; if not, ask them to send a screenshot. Once you’ve made your first transaction together, that account will appear at the top of your app for easy reference.
Leslie Meredith has been writing about technology for more than a decade. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at firstname.lastname@example.org.