Five strategies to use payment apps safely

Avoid questionable payment requests, only send money to people you know and upgrade your privacy settings

If you need to exchange money for goods or services with someone you don’t know, the safest way to do that is through credit cards, experts say. PA

As a frequent PayPal user, I wasn’t surprised to see a payment request on the app pop up. But when I read it, I knew something was wrong.

In the message, a stranger asked me to send them $699 to get a “refund”.

While I instantly recognised the request as fraudulent, I still felt vulnerable; I didn’t immediately see any obvious way to flag the request as a fraud, and with one click, I could have accidentally sent this stranger a huge chunk of money.

I am hardly alone in my worry over security when using peer-to-peer payment apps.

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 unauthorised users”, according to a Pew Research Centre survey published last September.

And an alarming 13 per cent of people who have used PayPal, Venmo, Zelle or Cash App say they have made the mistake of sending money to a fraudster.

Fraud prevention experts recommend these strategies to keep your money safe.

1. 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 of 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.

“If you do that, and you’re careful in terms of what number you are sending money to, these apps can be a convenient, safe and efficient way to move money.”

2. Use cash and credit cards in high-risk 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 (up to your policy’s limit and depending on your policy).

3. Be wary of texts, calls or unsolicited requests

Frauds are often perpetuated when fraudsters 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 cyber criminal might impersonate the Internal Revenue Service or FBI and ask you to send a peer-to-peer payment immediately to satisfy a debt, but Mr Williquette says legitimate agencies will never contact you by text or call your cell phone 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.

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From phishing to smishing: know your frauds

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  The use of technology in everyday lives has led to growth in scams and fraud. Reem Mohammed / The National

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  Phishing is one of the most common methods used by fraudsters and it involves sending an unsolicited email that appears to be from a financial institution or online retailer. The National

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  Smishing — the SMS equivalent of phishing — is where fraudsters falsify the telephone number so it appears to be a genuine text from a bank or well-known company. Chris Whiteoak / The National

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  Vishing is the telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. Getty Images

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  SIM swap involves fraudsters duplicating the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank. AP

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  Identity theft is where someone illegally obtains your confidential information, through various ways such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks. Getty Images

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  Prize scams involve fraudsters claiming to represent well-known organisations. They contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.

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  Instagram influencer Ramon Abbas, known as Hushpuppi, used a technique known as business email compromise.

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  The tax authority said some bank customers in the UAE have received phishing emails impersonating financial institutions. EPA

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  Jenny Ross, Which? Money editor, says: ‘Scammers are relentless when it comes to wanting our personal information and ultimately our money.’ PA

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  Netflix's The Tinder Swindler tells the story of three women who say they were conned out of $500. Photo: @simon_leviev_official via Instagram

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 chief executive of the Identity Theft Resource Centre, a non-profit.

Ms Velasquez urges people to verify requests first by double-checking they are sending money to the correct person, and says it is easier to fall for fraud when you are distracted and multitasking.

4. Upgrade your cyber hygiene

Enabling two-factor authentication on financial accounts, adding a pin lock to your phone and using unique passwords that are at least 12 characters long can help keep you safe, Ms Velasquez says.

In addition, she suggests setting your app privacy settings to the most private option to minimise the amount of information about you that is publicly available.

5. Flag fraud attempts

According to PayPal, if you receive a payment request like the one I got, you should cancel the request without paying.

Additionally, you can take a screenshot and forward it to [e-mail].

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 swindler, PayPal says you should change your password immediately, alert your bank and report any unauthorised payments to PayPal.

In my case, I cancelled the payment request and never heard from my would-be fraudster again.

With enhanced security steps in place, I plan to continue to take advantage of the convenience of PayPal and other payments apps — and now I know what to do next time I get an unsolicited payment request.