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How to safely use payment apps

How to safely use payment apps


A frequent PayPal user wasn’t surprised to see a payment request pop up, but knew after reading it that something was wrong.

A stranger asked to be sent $699 in order to get a “refund.” The use instantly recognized the request as a scam, but didn’t see any obvious way to flag it as a scam. Just one click could have accidentally sent the stranger a huge chunk of money.

Worry about security when using peer-to-peer payment apps is widespread: According to a Pew Research Center survey last September, about one-third of people who use payment apps or websites say they are “a little or not at all confident that payment apps or sites keep people’s personal information safe from hackers or unauthorized users.” And an alarming 13% of people who have ever used PayPal, Venmo, Zelle or Cash App say they have made the mistake of sending money to a scam artist.

Only send money to people you know

Generally, 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, then you put yourself at risk for fraud.

“You shouldn’t send money unless you’ve met people in real life and know who you are sending money to,”
says Paul Benda, senior vice president of operational risk and cybersecurity at the American Bankers Association, a trade association for the banking industry.

Use cash or credit cards in riskier situations

If you need to exchange money for goods or services with someone you don’t know, the safest way to do that is through cash or credit cards, says Axton Betz-Hamilton, an assistant professor in the School of Health and Consumer Sciences at South Dakota State University and author of “The Less People Know About Us,” a memoir about identity theft.

Credit cards, for example, come with fraud protection attached. “I want that protection, so I don’t use these apps,” she says.

While stolen cash can be harder to recover, it may be covered by homeowners and renters insurance policies.

Be wary of texts, calls and unsolicited requests

Frauds are often perpetuated when scam artists send a text, phone call or other kind of message urging you to send money, perhaps claiming you are due a refund or late on a bill.

“Fraudsters continue to get better at what they do,” says Joel Williquette, senior vice president of operational risk policy at Independent Community Bankers of America, a trade group for community banks. That includes sending emails that are almost indistinguishable from legitimate banking emails.

A cybercriminal might impersonate the IRS or FBI and ask you to send a peer-to-peer payment immediately to satisfy a debt, but Williquette says legitimate agencies will never contact you by text or call your cellphone with an urgent request for money.

“Typically, they will send you a letter,” he says, and they don’t ask for payment through apps or gift cards — another red flag.

A fraudulent payment request sent on a peer-to-peer payment app is “usually for a small dollar amount and might even look like it’s from a friend,” says Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit organization.

Flag fraud attempts

According to PayPal, if you receive a suspicious payment request, you should cancel the request without paying. Additionally, you can take a screenshot and forward it to phishing@paypal.com. PayPal adds that you should not reply, open links, download attachments or call any phone number included in the request.

If you mistakenly disclosed any financial or personal data to a scam artist, PayPal says you should change your password immediately, alert your bank and report any unauthorized payments to PayPal.

Related links:

NerdWallet: Top peer-to-peer payment apps: Pros, cons, and how to use them https://bit.ly/nerdwallet-peer-to-peer-money-transfers

Federal Trade Commission: Report to help fight fraud https://reportfraud.ftc.gov/



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