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5 tips to avoid being scammed when using a payment app

No matter which mobile payment app you choose, experts recommend these tips to avoid being scammed.

Many Americans are more likely to send money to friends and family through a payment app on their smartphone than write a check these days. It’s convenient, easy to use and, for some, a contactless transaction that may reduce health and safety concerns during the COVID-19 pandemic. Yet there’s another major factor to consider: fraud. 

“Consumer complaints are rising steeply within the mobile app payment industry,” said Kia McCallister-Young, director of America Saves, an initiative of the Consumer Federation of America. Fraud rates among mobile payment apps are three to four times higher than traditional payment methods, according to the CFA, and are being exploited by scammers.

“People of color and low-income earners are targeted by scammers at higher rates than other consumer demographics,” McCallister-Young added. The CFA found that among Black and Latino consumers, two in five have been targeted by a scam and one in five have lost money due to a scam.

Mobile payment apps can be very attractive to scammers, experts say, since you generally don’t get the same fraud protection as you do with debit and credit cards. Scammers may link a stolen credit card to a payment app to make a purchase, set up transactions and cancel them before they go through or send an email saying you were overpaid for an item and need to send the money back. And with an app, money transfers happen so quickly that it can make it difficult to detect fraudulent payments. 

With mobile payment apps, “the beauty of it is that it’s instant,” said Ted Rossman, senior industry analyst at “The problem is that it’s very hard to get the money back. You definitely need to make sure that you’re sending it to the person you want to send it to.” 

The type of online payment system you use may also have an impact on whether you’re more or less likely to lose money if you are scammed. 

According to a 2021 report from the Better Business Bureau, the median dollar loss for online purchase scams was $90 for PayPal, which is much lower than median losses reported for Zelle, Venmo, Apple Pay, Google Pay and Cash App. PayPal can be linked to bank accounts or credit cards. Zelle allows bank-to-bank transfers, but you can’t link it to your credit card. The differences in the way money is transferred can result in different payment protections. 

No matter which mobile payment app you choose, the BBB and other experts recommend these five tips to avoid being scammed:

  1. Transfer money only to people you know and make sure you have the correct phone number or email for that person when making the transfer.
  2. Enable security features like multi-factor authentication on the app and your smartphone that may require a PIN, fingerprint or face recognition.
  3. Keep your smartphone secure with a strong password, biometric features or two-factor authentication.
  4. Link your mobile payment app to a credit card rather than a bank account or debit card.
  5. And always check that the money transfer has been completed.