Using payment apps? Here’s how to protect yourself from scammers
More people are losing money through payment apps. Here’s why it’s often difficult to recover your money and what you can do to protect yourself.
Whether you’re splitting a dinner bill, paying a friend back or covering your share of the rent, payment apps have become part of everyday life and make it quick and easy to send money. But those same apps are also a popular target for scammers.
Federal Trade Commission data shows people in their 30s and younger are especially likely to report losing money through payment apps.
One of the biggest reasons comes down to 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 — like if someone gets into your account and moves money around without your permission.
But if you authorize the payment yourself, even because a scammer tricked you into doing it, the situation is different.
In many cases, those transactions are considered authorized under federal law, meaning banks and payment platforms may not be required to reimburse you.
That’s one reason scammers often pressure victims into sending money themselves rather than trying to steal it directly.
Are any protections changing?
There has been some movement in recent years.
Zelle, which does not hold consumers’ funds and transfers money directly between participating banks and credit unions, says those participating financial institutions are required to reimburse customers for certain qualifying imposter scams.
However, the company does not publish a detailed list of which scams qualify, saying doing so could give criminals a roadmap for exploiting its reimbursement policies. Each claim is evaluated by the customer’s financial institution based on the specific facts and circumstances.
PayPal and Venmo have also introduced AI-powered scam alerts for Friends and Family payments. The companies say the technology analyzes transactions for signs of a potential scam and warns users before they send money. Higher-risk payments may trigger stronger warnings or be declined.
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, recovering your money can be difficult.
If you’re buying something from someone you don’t know, check whether the platform offers purchase protection before you pay. For example, PayPal’s Goods and Services option may help protect eligible purchases if there’s a dispute. Be sure to review the platform’s eligibility requirements before sending money, as not every transaction is covered.
Finally, be skeptical of anyone creating a sense of urgency or insisting you pay through a payment app, gift cards or wire transfers. Those are common tactics scammers use to pressure people into sending money before they have time to verify the request.
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