The rise in popularity of cashless payment options like Venmo and CashApp have made them a go-to way to pay friends or make purchases from small vendors.
An advisory from the Consumer Financial Protection Bureau, however, warned that there are risks involved with storing money in these apps, and the Better Business Bureau has cautioned about scams users might experience.
Despite those risks, the convenience of payment apps makes them continue to grow in popularity, and according to the Pew Research Center, more than three-quarters of Americans say they’ve used them.
If you’re one of them — or thinking about joining their ranks — follow these five steps to stay safe:
1. Transfer Funds to Your Bank Account Regularly
The CFPB’s bulletin pointed out that most payment apps do not provide the same protections for your balance as a bank account backed by the Federal Deposit Insurance Corporation. That means that if the app goes belly up, there’s no guarantee you can recover your funds.
In addition, a high-balance account could make you a bigger target for criminals. And, with interest rates on the rise, you may be missing out on the opportunity to earn a return on the cash sitting in your payment apps.
2. Choose the Most Restrictive Privacy and Security Settings
If you use a payment app, make sure you set up two-factor authentication and public transaction sharing. Then, choose a unique password and opt to lock your phone after a short amount of time so if it gets stolen no one can get into the app.
3. Keep an Eye Out for Red Flags
Criminals like to use peer-to-peer payment apps because the payments are often irrevocable, making it easier for them to keep the funds by the time you realize you’ve been had.
“From a bad actor’s perspective, since the money is not coming from a bank account or a credit card, there’s less opportunity for an intervention to stop it,” says expert in cybersecurity and online safety Tate Jarrow.
[Read: Venmo vs. Paypal: How These Payment Apps Stack Up.]
Signs of a potential scam might include:
— Unwillingness to accept other forms of payment.
— Pressure to complete a transaction right away.
— Requests for payment in order to receive a prize or refund.
4. Make Absolutely Sure You’re Sending to the Right Recipient
Aside from scams, one risk when using payment apps is that you’ll accidentally send money to the wrong person. Getting those funds back can be a challenge, so confirm the person’s handle before pressing “send.”
Because using apps isn’t entirely safe, consider using any available enhanced security features, such as the Venmo option to enter part of the recipient’s phone number to validate the account.
[6 Scams That Target Your Bank Account]
5. Report Any Potential Scams Immediately
Opt into notifications that alert you to certain transactions, or make it a habit to regularly check your account.
“The quicker you spot something amiss, the faster you can take action,” says Courtney Alev, director of product & consumer financial advocate at Credit Karma. “If you see something suspicious, report it immediately.”
All the large peer-to-peer payment apps have a feature that enables users to report potential scams. The sooner you document the case, the better chance you have at recovering your cash.
In addition to notifying the payment platform, you should also let the bank or credit card company that’s linked to your account know what happened. Finally, report the scam to the Federal Trade Commission at reportfraud.ftc.gov.
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Sending Money to a Friend via App? Here?s How to Stay Safe originally appeared on usnews.com
