Payment apps have made life easier for mobile phone users in a big way, but there have been some serious drawbacks when it comes to security, and customer service has basically been customer no-service in some cases.
Use PayPal, Venmo or Zelle? Here’s how to curb payment app scams
One of the biggest problems is payment app scams, which continue to proliferate.
Money expert Clark Howard points to a Detroit Free Press article that sheds light on a relatively new scam that's difficult to stop.
This is “a fast-growing crime going around the United States where criminals are emptying your checking account by tapping into your PayPal account, your Venmo account, your Zelle account and others like that,” Clark says.
How this new payment app scam works
“If a criminal is able to [access] the username and password to your Venmo, PayPal or Zelle or any of these accounts, they could have unlimited access to the money in your checking account,” Clark says.
There are lists of millions of user name and password combinations available for purchase on the Dark Web, so there’s a chance one of yours is out there somewhere.
Particularly around the first of the month, when you’ve gotten paid, is when the crooks tend to pounce, he adds.
In some industries, things could get ironed out rather quickly and refunds and reimbursements would commence, but that’s not so easy in the world of payment apps.
"Generally, there's no way to get your money back," Clark says.
Want to limit the damage from payment app crimes? Here’s how
Fortunately there is something you can do to mitigate the damage if you are a victim of one of these crimes, and takes little effort to carry out: Set up a separate payment app account.
“You and I can’t stop the crime from happening, necessarily, but we can limit the damage severely,” Clark says. “There are all these online checking accounts you can open now that have no minimums and no fees.”
So, if you like the convenience of PayPal, Venmo and Zelle, set up a checking account that you specifically put money into for transactions with those services. This way, if you are hacked, the criminals only get to what’s in those accounts.
Clark says opening a separate checking account that feeds your payment apps is the way to go.
“Leaving it tied into your main checking account is really risky today with the ability of criminals to crack the code on usernames and passwords.”
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