P2P digital payment apps are convenient but risky, say experts

The US Consumer Financial Protection Bureau says P2P digital payment apps like Venmo, Zelle and Cash App are not very safe, and that users should be cautious with them. — Business vector created by gstudioimagen - www.freepik.com

Person-to-person digital payment apps like Venmo, Zelle and Cash App are convenient, but are they safe? The US Consumer Financial Protection Bureau says not very.

A report recently released by the bureau states more than 5,200 complaints were filed between May 2020 and April 2021. Since 2017, when the agency first began accepting complaints, they’ve received 9,277.

Folks are using these apps to pay for everything from babysitters to lawn services. A friend needs to borrow a few dollars, you can get the money to them in just a few minutes. It’s like handing someone cash.

But with the convenience comes the risk. These transactions for the most part are instant and irreversible.

The report states: “The three most common complaints involving digital wallets are problems managing, opening, or closing accounts; problems with fraud or scams; and problems with transactions (including unauthorised transactions).”

A news report from Tampa, Florida, described what happened when an individual mistakenly received a US$360 (RM1,521) payment via Zelle. He returned the money, but that person filed a dispute, and the bank took another US$360 (RM1,521) out of his account. He then had to fight with the bank to recover his money.

Scammers are also using the apps for phishing schemes. The complaints filed show how scammers take advantage of consumers due to easy availability of usernames and phone numbers, which they then use to take over accounts.

There are risks using any of the digital apps, but Cash App appears to be a favourite target of scammers and fraudsters.

A few of their favourite scams are:

The cash flipping scam: This one is all over Twitter, Instagram and Facebook. It’s the top get rich quick scheme that will always leave you disappointed. You are asked to send a person US$10 (RM42) to US$1,000 (RM4,225). They promise to send you back double or triple your money. Sometimes the scammer will say that they received money from a big company like Walmart, and to make it not look suspicious they need you to send a small amount first upfront, and then they will pay you a huge amount of cash back. Sounds familiar – think Nigerian letter, fax or email scams.

Cash App Friday: It’s called the Cash App Friday because scammers advertisements on Instagram, Facebook and other social networks run on Friday. You’re supposed to send US$1 (RM4) to US$5 (RM21) via cash app for a chance to win up to US$1,000 (RM4,225) or more back. You will send money in, but the chances are slim to none that anyone will ever win.

Pet Deposit: This one promises you a pet at a ridiculously low price. They will claim to have highly sought-after pets such as purebred dogs and cats. They’ll ask you to send the money with Cash App to hold the pet for you. You send the money, but that perfect pooch will never be seen.

Buy Online Scam: The crook will put something for sale online. Instead of Paypal or another service that offers buyer protection, they request you send the money with Cash App which has no buyer protection. They never send you the goods and you lose the money.

Cash App is not the only payment app that lacks buyer protection. It’s true of all of them. Plus, for the most part, one of the major complaints is a lack of customer service availability when you have a problem.

Nonetheless, digital payment apps are here to stay. The US Consumer Financial Protection Bureau has some recommendations to use them more safely:

  • Using a P2P app is like spending cash. Use it only for friends and others you both know and trust.
  • Review and set all your app privacy settings to the most secure available options. Some apps make information about your transactions and your friends public by default.
  • Use all available security settings, which differ by app. If you have the choice to turn on text notifications of transaction activity, use it. If you have the choice to use two-factor authentication, use it.
  • If possible, keep one separate bank account to link to P2P accounts. Do not link P2P accounts to your primary account or one with a sizable balance.
  • Consider linking your app to a credit card, which is safer than using a debit card or bank account.
  • If you are going to send money to a particular person for the first time through a P2P payment app, even to a person you know, you should ask the person to send a request for the money.
  • Be aware that money received through an app can be taken away if the transaction involved a hacked or fraudulently accessed account. For example, if someone buys a used bicycle from you using a hacked app account, the transaction could later be reversed – meaning you, the seller, sold your bike for nothing. – Rockford Register Star, Illinois/Tribune News Service
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