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,…
