Digital Wallet Scams

Welcome back to Fraud Fridays! Today, let's discuss Digital Wallet Scams!

If someone sends you a lot of money unexpectedly, it's probably a mistake, right? Well, not necessarily. If ever you have used Venmo or another P2P (person-to-person or peer-to-peer) digital wallet, you must keep an eye out for the new variant of a classic con.

This scam is not dissimilar to check scams, but it'll start with a message on a P2P payment platform. Reading along the lines of "OOPS! I need that back," you'll notice a large payment from a stranger. Coupled with the message, it must be an earnest mistake! After all, technology is a fickle mistress and mistyping a username is commonplace. Returning the money may seem like the right thing to do, but don't fall for it!

So, the message says one thing, but what's the real story here? It started with a stolen credit card. The scammer used this card to "send" money to you. They will then remove that card from their account and replace it with their own.

The payment platform will eventually realize that the card used was fraudulent. Leading to them pulling those funds from your account. By this point, if you have paid the scammer, they are home-free with your cash while you are stuck footing the bill.

This confidence game is just one of many that use digital wallet apps such as PayPal, Venmo, Zelle, and Apple Pay. Unlike credit cards, most digital wallet vendors will not shoulder the cost of fraud. If you pay scammers via a digital wallet, you will likely never see those funds again.

So, that's all unwell and terrifying, how do you stop it?

Stopping it has proven nigh impossible, but avoiding it is significantly easier.

Firstly, keep it between friends! Protect yourself from scams by only using money transfer apps for their intended purpose -- sending money to people you personally know.

Secondly, if someone is claiming to have sent you money by mistake, ask them to simply cancel the transaction. The sender can request that the vendor cancel the transaction. If the person refuses, it’s probably a scam.

Third, up your security! No, I'm not telling you to get a Ring camera, additional security on P2P apps can come in the form of multi-factor authentication, PINs, or fingerprint recognition.

Finally, 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. Credit is easier to pull back. Paying with your debit card is akin to paying with cash. When's the last time you've successfully torn your cash back from someone without legal disputes?

Thank you, again, for stopping by for Fraud Fridays. I hope you all have a fantastic Friday!