Use payment apps? How to protect yourself from scammers
More and more people are losing money through payment apps. Here’s why it’s often difficult to get your money back and what you can do to protect yourself.
Whether you’re splitting the dinner bill, paying back a friend, or covering your share of the rent, payment apps have become part of everyday life, making sending money quick and easy. But these apps are also a popular target for fraudsters.
Data from the Federal Trade Commission shows that people in their 30s and younger are particularly likely to report losing money on payment apps.
One of the main reasons lies in federal law.
Why is it so hard to get your money back?
The Electronic Fund Transfer Act requires banks to investigate and generally reimburse unauthorized electronic fund transfers—for example, if someone gets access to your account and moves money without your permission.
However, if you authorize the payment yourself, also because a fraudster tricked you into doing so, the situation is different.
In many cases, these transactions are considered approved under federal law, meaning banks and payment platforms may not be required to reimburse you.
This is one of the reasons why scammers often push their victims to send money themselves rather than trying to steal it outright.
Are any protective measures changing?
A lot has changed in recent years.
Zelle, which does not hold consumer funds and transfers money directly between participating banks and credit unions, says these participating financial institutions are required to compensate customers for certain qualifying frauds.
However, the company does not publish a detailed list of eligible scams because it could provide criminals with a roadmap to exploit its refund policies. Each claim will be evaluated by the customer’s financial institution based on the specific facts and circumstances.
PayPal and Venmo have also launched AI-powered fraud alerts for payments to friends and family. The companies say the technology analyzes transactions for signs of potential fraud and warns users before sending money. Higher risk payments may trigger more severe warnings or be rejected.
How to protect yourself
Your best defense is to treat payment apps like cash. Only send money to people you know and trust because once you authorize a payment, it may be difficult to get your money back.
If you buy something from someone you don’t know, check whether the platform offers purchase protection before paying. For example, PayPal’s Goods and Services option can help protect legitimate purchases if a dispute arises. Be sure to check the platform’s eligibility requirements before sending money as not every transaction is covered.
Finally, be skeptical if anyone conveys a sense of urgency or insists that you pay via a payment app, gift cards, or bank transfers. These are common tactics scammers use to pressure people into sending money before they have time to verify the request.
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