How to Protect Yourself While Using Mobile Payment Apps

14 April 2015

While mobile payment apps like Venmo, Square Cash and Apple Pay might seem like convenient ways to avoid having to carry cash, they can be extremely inconvenient if using them leads to fraud and identity theft. Ever since these apps came on the scene, there have been consistent challenges to their security from hackers and run-of-the-mill fraudsters alike.

For example, Venmo recently came under fire for its delayed response to a customer’s report that his account had been hacked. It took the company two days to reply to the customer’s complaint that someone had gained access to his Venmo account and used it to transfer about $2,850 from his Chase bank account.

Meanwhile, fraudsters have discovered that they can start up new Apple Pay accounts using stolen identities and credit card numbers. This type of fraud has been occurring at Apple stores since the major security breaches at Target and Home Depot. No hacking is even necessary in this case — all the criminals need in order to carry out this type of scam is have access to someone else’s name, personal information and credit card numbers.

Jim Bruene, founder of a major international banking technology conference, told Yahoo Finance, “E-payments solved [some problems], but they have created new ones along the way. It’s this constant battle between making new improvements to security and crooks catching up to them.”

These issues don’t mean that you have to swear off mobile payment apps entirely. After all, carrying around large amounts of cash is no more secure, and the apps do provide a high level of convenience when transferring payments or splitting the dinner bill with friends. Here are a few tips to help keep your personal information safe while using these apps:

  • Use two-factor authentication when you can. This is an extra layer of security that requires you to log in to the app with your password first, then enter a code that the app texts you to be sure it is being accessed from your phone. Venmo and Square Cash don’t offer this feature yet, but Google Wallet requires it any time you sign into your account from a new device.
  • Link apps to credit card accounts, not to bank accounts. Generally speaking, it is easier to recover money lost to fraud from a credit card company than from a bank, and you don’t want your bank account to be drained when you have bills to pay. By only linking mobile payment accounts to credit card accounts, you will have a second chance to verify that no fraudulent purchases have been made.
  • Turn on alerts when transactions are made. Most mobile payment apps have an option you can turn on in the settings that will send you a notification every time a payment is sent or received.
  • Only buy mobile payment apps from official stores. Stick to established app stores like iTunes and the Google Play store when purchasing this type of app. Some fraudsters have created legitimate-looking copies of apps on the market, then sold them from copycat websites, causing users to hand over their identity and credit card information.
  • Secure your phone itself. Remember that if your phone is stolen and you don’t have it password-protected, thieves may be able to gain access to your accounts.

To give yourself some peace of mind in the face of the dangers of identity theft and credit fraud, consider signing up for a credit monitoring service.