When you need to pay a local teenager for some yard work or split the bill at a local restaurant with a friend, it’s increasingly common to use a payment app to send money to that person right from your cell phone.

Unfortunately, the convenience of these payment apps comes with some risks. Scammers are figuring out new and creative ways to take advantage of people and cheat them out of their money.

Here’s all you need to know about payment app scams and how to protect yourself from being the next victim.

How the Scams Work

There are several variations of the mobile payment app scam, most of which involve the scammer hijacking the victim’s linked checking account or credit card and using it to pay for their own purchases. Now, though, with the COVID-19 pandemic changing people’s attitudes toward money, there is another, more nefarious scam being played out through mobile payment apps.

In a newer twist, however, people are invited to participate in a contest on Twitter or another social media platform. The host of the contest says they will give someone a bundle of cash as the prize!

After entering the contest, the victim receives a message informing them that they’ve won the giveaway — but they need to pay a small fee to “verify their account” and receive their prize. Thrilled to be the winner and suspecting nothing unusual, the victim will gladly pay the fee and wait for their big payday. Unfortunately, though, the money never lands in their account, and they won’t see the funds they used to pay the “fee” ever again.

Sometimes, the victim has not entered any contest, but receives a message appearing to be sent directly from the payment app informing them they’ve been randomly chosen to win a cash prize — with a small processing fee attached.

Other times, scammers take the ruse one step further. After asking the victim to send the fee via mobile payment app, the scammer hacks the victim’s linked account or credit card and uses it to make their own expensive purchases.

The scam can be pulled off through any payment app, but is especially popular with Cash App users who are familiar with something called “Cash App Fridays.” To the unsuspecting victim, the new freebies seem like an extension of the app’s existing giveaways.

Protect Yourself

If you believe you have fallen victim to a mobile payment app scam, contact the app’s support through the app or website. If the scam is reported early enough, they may be able to reverse the transaction. You can also report the scam to the FTC at ftc.gov and let your friends know about the circulating scam so they don’t fall victim to it themselves.

Here are some additional tips:

• Only send money to people you know and trust.
• Never use a P2P service for business-related transactions.
• When using Venmo, adjust your privacy settings and opt-out of public tracking.
• Carefully read the terms and conditions of a P2P service before using.
• Always choose two-factor identification and use a PIN when possible. If your app and phone allows, choose fingerprint recognition and/or touch ID for added protection.
• Accept any security updates offered by the P2P app you use.
• Check your recipient’s information carefully before completing a money transfer.
• Choose to be notified about every transaction.
• Link an external account instead of keeping your funds in the P2P account.

Mobile payment apps make transferring money easy, but they also make it easy for scammers to con victims out of their money. Stay alert and practice caution to keep your money safe.

Scammers are getting more and more creative — and convincing — in their efforts to separate you from your money. Join us this Wednesday, September 15 at 2:30 p.m. for a free webinar all about protecting yourself against fraud, identity theft and related topics. More information about this webinar is available here.