NASHVILLE, Tenn. (WTVF) — Cash is king as the saying goes, but not many of us carry it around anymore. Instead peer-to-peer payment apps like Venmo, PayPal, and Zelle give the convenience of cash right on our phones.
But what happens when something goes wrong? Could your hard-earned money be at risk?
“Once you’ve sent it, you’ve spent it.”
That’s what many electronic payment apps tell users. Sure they’re speedy and convenient, but Consumer Reports warns their lack of user protections, like those offered with most credit cards – can make these services very attractive to fraudsters and risky for consumers.
“The main risk in using a P2P app is that you have no recourse in getting your money back if you send money to a scammer or to the wrong person or if you send the wrong amount because of a typo,” said Octavio Blanco, Consumer Reports Money Editor.
Last year alone, the Federal Trade Commission says there were more than 70,000 reports of fraud and $130 million in losses with mobile payment apps.
And the apps are under fire from consumer advocates demanding protection from fraud and errors for users.
But until that happens, CR says one way to protect your payments using P2P apps.
“Link your credit card to the app and fund your payments through the credit card,” Blanco said.
When you do that, you could benefit from the same purchase protections that your credit card offers, but it might not be free. Many P2P apps charge about 3% when you use a credit card.
If you do choose to keep your P2P app linked to your bank account, CR offers this word of caution.
“If you are going to be using your P2P account for things like sending money to people you don’t know, you really have to be very careful—because you have no way if something goes wrong to get that money back and that could be very costly,” she said.
Consumer Reports contacted Cash App, PayPal, Venmo and Zelle.
All of them said keeping users informed and educated, and protecting them from fraud are top priorities.
