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Money transfer apps: Common scams and how to avoid them

  • / Updated:
  • Abbi Aruck 

Mobile payment or money transfer apps are a convenient way to send and receive money.

money transfer

As they are increasing in popularity, more scams are happening. Here is information on common scams and how to avoid them.

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How do mobile payment apps work?

Venmo, Cash App, and PayPal are all mobile payment apps. They allow you to send and receive money through your smartphone, or online. After downloading the app and creating an account you will have to select a payment method or source of funds. This can be a bank account, debit card, or credit card.

Once the account has been set up you will be able to send and receive money. However, when someone sends money, it does not go directly into your bank account. The money gets added to your balance on the app. The money can sit there for later use or you can transfer it into your bank account.

Common scams

Right now there are a few scams circulating on CashApp:

  1. CashApp flipping- look out for direct messages from users offering to help you turn a small sum of cash into larger amounts by “flipping” and then leaving with the money.
  2. Fraudulent payment claims- watch for messages claiming you are entitled to a payment but must send a smaller amount first to claim– you will not receive funds back.
  3. Pet sales- this scam became very popular during the pandemic. Scammers charge would-be pet owners for an animal that doesn’t exist. Typically, they offer pets at unusually low rates and insist that they be shipped as opposed to picked up in person.
  4. Phishing scams and CashApp impersonation- scammers reach out pretending to be a CashApp service representative by email, social media, phone or text to collect personal or financial information.
  5. Gift card scams- scammers reach out asking you to purchase a gift card on their behalf after sharing the gift card information to verify the purchase they take it without paying you.

How to avoid paying a scammer

Scammers will often try to trick you into sending them money through a mobile payment app because it is hard to get back once you do. The FTC reminds us that scammers often pretend to be a loved one who’s in trouble and ask you for money to deal with an emergency. Others may say you have won a sweepstakes but need to pay fees to collect it. Here are some things to keep in mind if you are making a payment via mobile payment apps:

  • Don’t send a payment to claim a prize or collect sweepstakes winnings
  • Don’t give your account credentials to anyone that contacts you
  • Protect your account with multi-factor authentication or a PIN
  • Before you submit any payment, double-check the recipient’s information to make sure you’re sending money to the right person

If you already sent money and think it may be a scammer– be sure to report the payment to whichever transfer service you are using.

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