CONSUMER ALERT: With the Rise in Use of Digital Payment Apps, the New York Department of State’s Division of Consumer Protection Provides Tips to Protect Your Money

The New York Department of State’s Division of Consumer Protection is providing consumers with tips to protect their money and financial information while using payment apps. Payment apps, including Venmo, Cash App, Zelle, and others, allow consumers to instantly transfer money to friends and family members with a click of a button on their mobile device. However, many payment app users have been tricked into sending money to a scammer or have had their accounts hacked. In 2024, consumers nationwide reported over $390 million in losses to the U.S. Federal Trade Commission from scams that used payment apps or services. This is over $100 million more than consumers reported losing in 2023.

“We’ve all been in a situation where a friend picks up lunch and says, ‘Just send it to me later through this app!’ While many payment apps are convenient and often cheaper than using an ATM, they can also come with risks.” said NYS Secretary of State Walter Mosley. “Scammers are finding new ways to exploit these payment apps every day, so if you do choose to use them, make sure you follow these tips from our Consumer Protection division to keep your personal and financial information safe.”

What You Need to Know About Payment Apps:

• Payment apps are attractive for scammers: Payment apps offer convenience, as consumers can easily make instant payment transfers or transactions at any time or anywhere. This makes it convenient for scammers who use various tricks to conceal their tracks.
  • Scammers may trick consumers into sending them money, often by using fake profiles, such as pretending to be a loved one who’s in trouble and asking for money.
  • Others may impersonate companies offering sweepstakes or prize winnings but claim a fee needs to be paid to collect it.
  • Others might use "accidental" transfer scams, where they send money from a stolen credit card and then ask for it back.
• Payment app companies aren’t required to recover funds lost to fraud: Consumers who pay by credit card are protected by federal law and never liable for more than $50 lost to fraud or payments made in error. Payment apps aren’t required to recover money sent to scammers or in error. Fraud victims who use payment apps are rarely able to recover lost funds.
• Payment apps often don’t have federal deposit insurance: Federal deposit insurance protects consumers’ money in case a bank goes out of business or loses consumers’ money in bad investments. However, most payment apps are non-bank companies which are not FDIC-insured.

Five Tips to Use Payment Apps Securely:

1. Don’t leave large amounts of money in payment apps: Regularly transfer your payment app balance into a traditional checking account which has greater legal protections for your money.
2. Only send money to people you know and trust: Never let somebody you haven’t met pressure you into sending money. Sending money through payment apps is a lot like paying cash. Once it’s gone, it’s gone. Even when you know the person, always double check that you’re sending the right amount of money to the right account.
3. Avoid linking to your entire bank account: Many payment apps encourage consumers to link their bank’s account and routing numbers to the app. This can leave your entire bank account vulnerable in hacking attempts. Linking to a credit card instead can be more secure.
4. Set your account to private: Some payment apps set account privacy settings to “public” as the default— meaning anybody on the app can see your transactions. Check your security settings and use the most private settings whenever possible.
5. Use strong security features and settings: Utilize features like fingerprint or facial recognition for transactions. Regularly update your payment app to ensure you have the latest security patches and features

How to File a Complaint

If you believe you made a payment to a scammer or find unauthorized payments on your account, report it to the mobile payment app and any bank involved. You can also report fraud to the FTC at reportfraud.ftc.gov/  and the Federal Bureau of Investigation’s Internet Crime Complaint Center at ic3.gov.

About the New York State Division of Consumer Protection
Follow the New York Department of State on Facebook, X and Instagram and check in every Tuesday for more practical tips that educate and empower New York consumers on a variety of topics. Sign up to receive consumer alerts directly to your email or phone here.

The New York State Division of Consumer Protection provides voluntary mediation between a consumer and a business when a consumer has been unsuccessful at reaching a resolution on their own. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at dos.ny.gov/consumer-protection. The Division can also be reached via X at @NYSConsumer or Facebook.