Payment Apps: How to Spot a Scam

It’s easier than ever to send people money using a mobile app on your phone. Commonly used apps include Venmo, PayPal, Cash App and Zelle. Some offer limited buyer protection, and others offer none. All of them make it easier than ever for con artists to trick you into sending them your cash. And unlike credit cards, once you’ve sent cash with an app, it can often be impossible to retrieve it.

What are some common scams and the telltale signs to watch out for?

• Phishing: A text message, email or phone call from someone claiming to be from customer support for your payment app asks you to verify your credentials. They may even add some urgency, saying that there’s been a breach of your information or that they “suspect fraud.” Some will ask you to click a link to a third-party website where they want you to enter your credentials. 
  
  • How to spot it: Even If you think the message may be legitimate, don’t click or give out your information. Instead, fact check the messenger by logging into your app separately or contact the app’s customer service team using the phone number in the app.
    
    
• Cash “flipping”: These are get-rich-quick schemes that often start small — promising to turn $200 into $1,000 — and offer a “money-back guarantee” if you’re not happy. They may send testimonies from fake profiles. Sometimes, they’ll give you a small return to gain your trust before cheating you out of larger amounts. They may even impersonate a friend, whether through trawling your social media profile or picking a common first name.
  • How to spot it: If it’s too good to be true, it is. Evidence can often be found by searching the internet with a few of the keywords they use.
    
    
• Affinity group scams: Con artists will claim to take your money and invest it on behalf of a specific group like U.S. Veterans, senior citizens, flood victims or immigrants, or they may claim to be with a government organization providing special funding for the group. Whether you’re a member of the named group or not, the scammer is preying on your emotions.
  • How to spot it: Do your own independent research on the claim. Sites like Charity Navigator can be good resources for information about charities, and U.S. government websites will contain information about any legitimate programs. There’s no reason to send money before you’ve checked them out, and honest nonprofits don’t require payment by mobile cash app.
    
    
• Pre-payment for expensive or hard-to-find goods: Social platforms and marketplaces make it easy to swap, barter for and buy items – even within neighborhoods or college campuses. It’s the perfect place for swindlers to get their payday. Most money apps don’t provide buyer protection, so you have little recourse if you fall victim. Another scam reverses this trick, sending sellers a fake message that money has been deposited to their mobile cash app for an item they’ve posted for sale.
  • How to spot it: If you’re required to send cash using an app before you can see and take possession of the goods, it’s probably a scam. Likewise, if someone claims to have paid you for an item you’re selling, verify the money is there before handing it over.
    
    
• Random deposits: You notice a payment in your favor that you weren’t expecting, and the person who sent it has reached out with instructions for what to do next. The money could have come from an illegitimate source like a stolen credit card. If you refund the sender, and the person whose credit card was stolen later files a fraud claim, you could lose that money. Con artists also use an “accidental” deposit to strike up a conversation and lure you into a scam.
  • How to spot it: If money you weren’t expecting shows up in your account, or someone says they want to send you money and you send part of it to someone else, it should be a red flag. If you don’t know the sender, do not withdraw or spend it. Instead report it as a potential scam.
    
    
• Prize money: A cash prize shouldn’t come with an upfront fee. Still, some crooks will try to fool you into thinking you have to pay one. The app named Cash App does have a legitimate #CashAppFriday giveaway just for posting your $cashtag on social media, but this creates opportunities for lookalikes and fakes to trick people by using the same model and hashtag to cheat people out of “entry fees.”
  • How to spot it: Anyone who claims you’ve “won” something but then asks for your personal identifying information or a fee for shipping or processing is likely a crook.
    
    
• Fake debit cards: Some money apps have their own “debit cards,” and scammers have also started to send unsolicited debit cards through the mail with instructions to download the app and scan a QR code to set it up. Unbeknownst to the recipient, they’ve used stolen information including names, SSNs, addresses, etc. to open cash app accounts. Once the recipient scans the QR code, sets up and funds the account, fraudsters simply transfer the money to themselves.
  • How to spot it: Don’t accept unsolicited debit cards in the mail from any source.
    
    

The bottom line: Use cash apps as if they were paper dollars in your wallet. Only send money to people you know and trust for services you’ve ideally already received or enjoyed. And don’t give out sensitive information on social platforms or enter it at a page from a link sent to you by text. If it smells fishy (or phishy!), it probably is. At the very least, double check using trusted sources. The time you spend will be worth it if it thwarts a criminal from stealing your money.