It’s so convenient: With the touch of a button, you pay a friend back for pizza, pay for your haircut or maybe even cover the cost of your child’s activities. Digital wallet apps are replacing that checkbook and putting payments at our fingertips — no pens necessary. But could they also be putting our financial information at risk?
There are horror stories like one out of Detroit, Michigan, where in one brief moment, a woman saw roughly $9,000 debited out of her checking account. She spotted the trouble when she went online to check her bank statement and immediately alerted the bank. After investigating, the bank rep told her the transfers were a result of her app being hacked. Just like that, thousands of dollars disappeared in a matter of a few transfers. So how do you protect yourself? Giving up this newfound way of convenience doesn’t seem the answer. Instead, the Better Business Bureau suggests safeguarding yourself and knowing how you may become a victim. Digital wallets link consumer bank accounts, credit cards and debit cards to an app. Scammers have been targeting these apps and executing variations on old schemes, including phishing and check-cashing schemes tailored to the new technology.
Loss or theft of the device containing a consumer’s mobile wallet can be a common problem that may arise, and sensitive information can be compromised. Adding a strong password or using biometric security devices available on some current smartphones is key.
Another risk involved with these apps or links is, unlike more traditional banking systems, many digital wallet vendors will not shoulder the cost of fraud. This means some consumers who have paid scammers using a digital wallet may not be successful in getting the company to reimburse them for their losses to the fraud.
Here are some other ways scammers leverage these apps to take your money: In one common scheme, scammers connect a stolen credit card to their digital wallet account. Then, they look for people selling big ticket items, such as a computer, tablet or car) on Craigslist or another online service. The scammers offer to pay for the product using their digital wallet. The seller accepts the payment and sends the item, but soon discovers the payment sent is not legitimate, and the money is removed from his or her account. It’s important to know that some digital wallet apps take several days to process a transaction. Scammers take advantage of this by setting up transactions and canceling them before they go through. By the time victims realize they’ve never received the money, the scammers are long gone. Protect yourself when paying with a money transfer app by following this advice:
Use money transfer with friends. Protect yourself from scams by only using money transfer apps for their intended purpose — sending money to people you personally know.
Link your money transfer app to a credit card. As with many other purchases, using a credit card helps protect you if you don’t get the goods or services you paid for. Linking to a debit card or directly to your bank account does not give you that added protection.
Check your account to be sure the money transferred. It takes a few days for some digital wallet payments to transfer. If you have any concerns that a payer didn’t really send the money, be sure to check your account directly.
The key is being vigilant and knowing what to look for. For more information on this topic and many more go to bbb.org.