Protect Yourselves When Sending Cash to Peers
USE APPS WITH CARE
Paying back friends in the wake of holiday spending? Apps with names like PayPal, Zelle and Venmo have caught on as fast and easy ways to send money from mobile devices. They are linked to a bank account or credit card, and designed for convenience.
But, importantly, these services lack traditional protections for your cash, and they pose potential risks if you are not careful. They typically will not protect you in case of a fraud—and speedy, easy-to-use features can facilitate fraud, according to the National Consumer Law Center. Money in such transactions may not be insured by the Federal Deposit Insurance Corporation. And these apps are not set up to provide the kind of personal support you may expect from your local bank.
One risk: If you purchase an item from a stranger, such as concert tickets, and the “seller” turns out to be a crook who never provides the promised item, you may have little recourse. Similarly, if you are the seller, a shady buyer may trick you into sending the item—and try to cancel the transaction before you get paid.
The Better Business Bureau advises several strategies to protect yourself with the new payment technology:
Use the highest security settings. These may include multi-factor authentication that relies on a PIN, or fingerprint ID.
Link your payments to a credit card. This may give you protection you do not get with a debit card or linking the app directly to your bank account.
Protect your phone with a password or biometric security device. If a crook gets hold of your phone, you do not want them to have access to your payment app.
Pay attention to the transaction process. Know that the process may take a few days. If you are selling something, make sure the money arrives before you ship the item.