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Digital wallets and mobile payment apps are becoming increasingly popular, making it easier to split rent with roommates, divide a bill at a restaurant, or pay a friend back for concert tickets. But just as banks fortify their vaults, consumers need to actively protect their mobile money from common money scams and mobile app fraud.
How can you safely use apps to send money without falling victim to common app scams? Check out our top tips for avoiding mobile payment fraud below.
How do mobile payment apps work?
Mobile payment apps like Chime’s Pay Anyone, Venmo, Cash App, Zelle, and PayPal allow you to exchange money with friends and family. These apps are often called peer-to-peer (P2P) payment apps – and though each has its own software and perks, they work similarly.
To use a P2P payment app, download it to your smartphone and create an account. Depending on the app, you may need to link your bank account. For example, Chime members may link an external checking account via debit card to fund their Chime checking account and can send payments directly from their Chime Accounts using Pay Anyone. Even non-members can receive money from Pay Anyone by providing a valid debit card.
Once you’ve linked your account, you can send and receive money. These apps offer a search functionality to find friends and family for easy digital payments.
The rise of fraud and scams on mobile apps
Fraud and scams have been around much longer than mobile payment apps, but these apps have given bad actors a new method for committing fraud and scams. Though the two are similar, note the key difference between fraud and scams:
- In cases of fraud, someone makes unauthorized transactions with your bank account, credit card, or P2P app – or uses your identity to create new accounts in your name.
- In instances of scams, someone tricks you into willingly authorizing transactions or sharing personal information.
Both fraud and scams are possible on P2P payment apps.
6 tips to avoid mobile payment app scams
How can you avoid mobile app fraud and payment app scams? Here are a few tips to help you protect your finances when using P2P apps:
1. Only use P2P with people you know
The easiest way to avoid mobile money scams is to limit your P2P payment app usage to friends, family, neighbors, coworkers, and people you trust. If you’ve just met someone – or are in contact with a stranger over the phone or email – don’t send them money via mobile payment.
In fact, when paying a friend for the first time, ask them to request the money from your account to ensure you’re paying the right person. Because account usernames can be similar, this will keep you from accidentally paying the wrong account. If using Pay Anyone, a member can request a payment from another member using the Chime app.
2. Recognize common money scams
Scammers use various tactics to encourage you to send them money via mobile app. Never send mobile payments to someone who says:
- You’ve won a prize but need to pay a fee to claim your earnings.
- You owe taxes to the IRS.
- They’re from tech support and need money to fix your computer.
Similarly, be cautious of romance scams where a person creates a fake relationship with you online, then requests money.
If buying a product from an online retailer like eBay, use the platform’s preferred payment method; if the seller insists on P2P payments, abandon the purchase.
3. Don’t give away account credentials
Scammers don’t need you to hit “send” to compromise your mobile payment app. They just need the login credentials.
Never give away login information to anyone – even an app’s tech support team. Chime will never ask you for login credentials like your password.
4. Use built-in security features
Most smartphones and P2P payment apps allow you to enable additional security features, like a PIN or passcode, biometric authentication (thumbprint or facial recognition), or multi-factor authentication.
Enable these robust security features on your account and phone. It is more likely that your accounts will remain protected if your device falls into the wrong hands.
Stay on your guard: Here are six tips to protect yourself from online scammers.
5. Verify unexpected requests from people you know
Scammers can trick you out of money by hacking a friend’s account. If you receive an unexpected request for money from a friend or family member, contact them outside the app to discuss.
If they didn’t send the request, they’ll need to work with the mobile payment app, Federal Trade Commission, and local authorities to report the fraud.
6. Always double-check before clicking “send”
Fraud and scams aren’t the only risk involved with a mobile payment app. Just like with wire transfers and paper checks, it can be more challenging to stop a payment once it’s out of your hands.
Before confirming the money transfer in the app, double-check that you’ve selected the right recipient and dollar amount.
What to do if you send money to a scammer
If someone gains access to your mobile payment app through fraud, you stand a better chance of getting your money back. You never authorized a payment, after all. Just follow the FTC’s steps for reporting identity theft.
But what if you willingly sent a scammer money via a P2P app? Unfortunately, you may have more trouble getting your funds back because you authorized the transfer. Contact the app’s customer service to see what steps you can take, and then follow up with the FTC and local police to file reports.
Should I send money to people I don't know?
Never send money to someone you don’t know. Only use mobile payment apps to transfer money to people you trust, like friends, family, neighbors, and coworkers.
If you’re sending money to a loved one for the first time, ask them to request money from you in the app to be sure you’re sending it to the correct account.
Are mobile payment apps safe?
Mobile payment apps have built-in protections that help to reduce errors and unauthorized transactions. Many P2P apps and mobile wallets include encryption and tokenization to protect your private information. You can also typically use a PIN or multi-factor authentication for additional security.
However, P2P fraud is on the rise. When possible, only download trusted mobile payment apps, and avoid P2P scams by only sending money to people you know.
How do payment app scams work?
Scammers may pose as government officials, bank or IRS representatives, local law enforcement, or other authorities to convince you to send them money via a payment app. In other cases of P2P scams, scammers may tell you that you’ve won a prize but need to pay a fee via mobile app to claim it.
Similarly, romance scammers may build a fake romantic relationship with you online, then request money via mobile app. Online sellers can also trick customers into buying poor-quality or fake products using mobile payment apps.
Practice P2P payment safety
Only use mobile payment apps like Chime’s Pay Anyone with trusted friends and family members. These apps are meant to make it easier to send money to people you already know.
Mobile payment app scams are just one way scammers will try to get your money. Discover more ways to keep your money secure with our Safety & Security content.