PROTECTING YOUR FINANCES
As payment apps become more popular, so do payment app scams. Every day, fraudsters try to trick people into sending money to their accounts, costing consumers hundreds of millions of dollars each year. It can happen to anyone, including this journalist who writes about financial fraud. (And kudos to her for sharing her story.)
These scams are effective because payments by app work like cash. Once the money's gone, it's gone, and there's virtually no way to track down the scammer or recover your funds.
Understanding the most common tactics can help you spot red flags before it's too late.
- Phishing: Fake texts and emails designed to get you to click malicious links or share your login credentials.
- Impersonation: Someone pretending to be a friend with an urgent request for money or a company demanding immediate payment for a supposed emergency.
- Fake invoices: Official-looking payment requests that arrive out of nowhere, often claiming you owe money for services you never used.
- Phony donation requests: Fraudulent charity appeals, especially those capitalizing on a recent disaster or emotional causes involving animals or children.
A look inside a typical scam
Jeff desperately wants tickets to a sold-out concert, so he turns to social media. He finds Andrea's post offering two tickets at face value—$400 total—because a family emergency prevents her from attending. Her profile appears legitimate, complete with several photos and posts, so Jeff messages her.
Andrea replies right away that the tickets are still available and sends Jeff her payment app handle. Oh, and can he please use the “friends and family” option so she won’t have to pay fees? That seems reasonable to Jeff, so he opens his payment app, sends the money, and within hours everything vanishes: Andrea, her social media profile, and his $400.
Did this simple example include any signs of a scam? Definitely! A little skepticism about these red flags could have saved Jeff $400:
- The stranger factor: Buying from an unknown seller offers little to no protection, unlike official resellers such as Ticketmaster, SeatGeek, and StubHub, which provide buyer guarantees.
- A price that’s too good to be true: Sellers almost always inflate the price of sold-out concert tickets, so the low price should have raised suspicions.
- No proof of purchase: Jeff could have asked Andrea for a receipt or order number to verify that she had actually purchased the tickets. (While this, too, could be faked, her reply might be a tipoff that something is off, like getting defensive or sending an obviously fake receipt.)
- Andrea’s payment request: Choosing the friends and family option seemed innocent enough, but it was a calculated strategy that eliminated Jeff’s ability to dispute the transaction or recover his money.
How to protect yourself from payment app fraud
Here are a few ways to keep your money in your account and out of scammers’ hands:
- Verify unexpected payment requests. If you receive an unexpected call or text about a payment that requires a payment app, hang up or delete it. If you are unsure, call the number listed on the company’s official website (NOT the one in the message) for more information.
- Only use payment apps with people you trust. If it’s not someone you’d hand cash to, don’t send them money by app.
- Take a beat. Scammers create artificial emergencies and threats to pressure quick decisions. Take time to breathe, ask questions, and discuss the situation with a friend or family member.
- Be skeptical of unusual requests. Flagstar will never ask you to pay by app or send money to yourself. Scammers can spoof phone numbers and emails to look like they’re from us, even when they’re not. When in doubt, call or stop by a branch.
