Money transfer apps, also known as cash-sharing apps or mobile payment apps, have gained popularity in recent years. They provide a quick, easy, and convenient way to send money to friends and relatives.

Convenience also opens the possibility of lowering one’s guard and making it easier to fall prey to scams. Exercise caution when using these apps.

Here’s what you need to know about money transfer apps, and how to stay safe while using them.

How Money Transfer Apps Work

Money transfer apps are a form of peer-to-peer payment. Simply put, these apps let you send money to others directly. You link your payment information (like a bank account, credit card, or debit card) to pay others using your phone or mobile device.

Think of these apps as a step up from exchanging paper money. Some of the most popular cash-sharing apps include:

• Venmo
• Cash App
• PayPal
• Zelle
  

The most common use of these apps is sending money to friends and family to help pay for things. Some businesses also use these accounts as payment methods for their goods and services.

Since these apps deal with real money, they also include security safeguards. Transfers occur over an encrypted connection, and users must keep login credentials to deter unauthorized access to funds.

There are many advantages to using money transfer apps:

• Lessens the chance of losing dollar bills or cards.
• No need to write and deposit a check and wait for it to clear.
• Can be used to pay relatives around the world.
  

The Risks of Using Money Transfer Apps

Money transfer apps have made sending cash to people you trust easier. However, as with all technology, scammers have found ways to steal from others using these methods.

A major feature of mobile payment apps is that they conduct “one-way” transactions. Once a transfer is confirmed, there is no way to undo or reverse it. This means scammers can trick people out of their money and make a quick exit.

In addition, scammers use separate personas and identities to create fake accounts, making them even more challenging to trace once the damage is done.

Being a mobile-centric technology, money transfer scams occur mainly through smishing or vishing. A scammer may pose as a friend, family member, or business to lure a victim into using these payment methods. Their messages may incorporate a variety of scenarios to compel you to take action, including:

• Posing as a relative and asking for money for an emergency
• Claiming you have won a raffle, sweepstakes, or some other prize
• Threatening legal action or punishment if you don’t comply
• Demanding payment upfront before sending a product or rendering a service
  

These messages may include a link to a dummy account that requires a money transfer app. In addition to sending money, you may be asked to enter login credentials or other sensitive information.

Protecting Against Money Transfer Scams

If you choose to use money transfer apps, always be mindful of how these scams proliferate. Vigilance and caution can stop fraud in its tracks.

Follow these quick tips whenever a money transfer app is involved in the transaction:

Verify your recipient: If a friend or loved one asks for money through an app, call them to ensure they’re sending the request. Be aware if someone you know sounds odd or exhibits abnormal behavior. Also, verify a recipient’s email to ensure their account isn’t spoofed.

Remember the channels officials use: Government agents, law enforcement, and established businesses rarely, if ever, use text or social media to message individuals. Always be skeptical of messages that claim to be from an official-sounding organization, especially if they attempt to compel you to click on links or provide information.

Secure your accounts: Legitimate peer-to-peer payment platforms use encryption to protect customers’ data. Keep your account login credentials updated and enable multi-factor authentication if it’s offered.

Be a savvy shopper: If you use a social media marketplace and a seller accepts mobile payments, arrange a meeting to see their offerings firsthand. Use the buddy system when meeting someone. Exercise caution if a seller insists on only using mobile payment. If distance is an issue, look up the seller’s profile and check reviews and feedback from their past customers.

The Federal Trade Commission has a good write-up on how to spot, prevent, and report money transfer app scams. Read their security tips for more information and what you can do to stop mobile payment fraud.

Learning to use new technology can be rewarding and make your life easier. When it comes to keeping your information secure, First Florida can help you stay SAFE. Visit our Scam and Fraud Education page to learn more about protecting your finances.