Avoiding digital wallet scams

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More and more consumers are using digital wallet apps like Venmo, Cash and Zelle to transfer money quickly and easily. But while the convenience factor is what draws many people to use the apps, scammers see it as an opportunity to seize your banking and credit information.

Scammers have been targeting digital wallets and executing variations on old schemes, including phishing and check cashing schemes tailored to the new technology.

Additionally, unlike most credit cards companies, digital wallet vendors are unlikely to cover the cost for fraud. This mean consumers may be unsuccessful in getting the company to reimburse them for their losses to the fraud. Consumers should be aware of any liabilities they may assume before choosing to use a digital wallet service.

Losing or having your device stolen is another area of concern consumers should be aware about.  Access to a digital wallet on a device can be prevented with a strong password or using biometric security devices available on some current smartphones.

BBB advises consumers to look out for the following scams when using digital wallets:

  • Fraudulent payment methods. In one common scheme, scammers will connect a stolen credit card to their digital wallet account. They then look for people selling big ticket items (such as a computer, tablet, or car) on Craigslist or another online service. The scammers will offer to pay for the product using their digital wallet. The seller accepts the payment and sends the item, but soon discovers that the payment sent is not legitimate, and the money is removed from his or her account. The seller is then without either the item or the money. Because of this problem, digital wallet services often advise that you do not accept payments through their service if you do not know the sender.
  • Canceled payments. 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.
  • You’ve been paid. Some fraudsters try to trick you into thinking that you’ve received a payment. They want what you’re selling for free. Before you ship anything, log into your digital wallet account and check that you were actually paid.
  • You have been paid too much. Fraudsters may try to convince you that you’ve been paid more than you were owed. For example, a spoofed email says that you’ve been paid $500 for a camera you listed at $300! The sender asks you to ship the camera in addition to the extra $200 you were “paid” by mistake. In this example, the scammer wants your camera AND your money, but hasn’t actually paid you at all. Don’t fall for it! Log into your digital wallet account and check that you were paid before sending anything. In another version of this scheme, scammers overpay for items with a stolen credit card. The stolen funds will be removed from your account, and if you send the scammer money they “overpaid,” you will that money, too.
  • Fake official emails. Many fraudsters send spoofed emails warning that an account is about to be suspended, and that the account holder must enter their password in a spoofed webpage. Generally, digital wallet vendors will never ask you to enter your password unless you are on the login page.

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 will help 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 that 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.

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