Payment App Fraud

Fraud Alerts

While the old saying might be “cash is king,” the convenience of applications like Venmo and PayPal has forever changed the way money is exchanged. These “peer-to-peer" payment apps can link directly to a bank account, debit, or credit card and allow users to send and receive funds directly from their mobile device, making them fast and easy to use.

As more people use these applications, fraudsters have followed. While convenient, it is important to be diligent when using these apps to keep you, your information, and your money safe.

Three Ways to Spot a Scam in Action


1. Text Messages/Emails

In reported fraud attempts, scammers have sent text messages and emails that mimic the color scheme and branding of popular applications like Venmo. The messages include a link where users are asked to supply personal information for their account to remain active or to avoid charges. Venmo, PayPal, and other payment applications will never ask or require you to provide copies of personal information, including your social security number or driver’s license.

Payment applications will never ask for sensitive information via text or email. If you receive a request to supply information or to click a link to verify your account, it is best to contact customer service directly.


2. Fake Purchases/Sales

Fraudsters have also used payment apps to make fake purchases or sales. Here’s an example: You are selling an item online and receive an offer from an interested buyer who wishes to pay via PayPal. Once you’ve agreed on a price, the buyer sends payment and in turn, you send the item to them. Once shipment is confirmed, the buyer contacts PayPal and asks for the payment to be reversed, meaning the money deposited to your account disappears along with the item sold.

3. Government Agency Impersonation

A scammer might also impersonate a government agency, like the IRS, requesting immediate payment to satisfy a debt. Fraudsters have also sent requests for small payments that, without close inspection, may look like they are coming from a friend. These scams criminalize the convenience of these apps, preying on those who might quickly honor the request without verifying the payment or payee first.

Three Ways to Stay Safe

  1. Only exchange funds on payment applications with people you know and trust. There is often no or limited protection for buyers and sellers on these platforms, so it is wise to only use payment apps with trusted sources or with authorized merchants. 
  2. You can use Card Control so you can turn your TowneBank debit card off or on if you suspect fraudulent activities.
  3. You can also set up text and email alerts in online banking, so you know when money is transferred out of your account.

Contact a Local Banker


Only deposit products are FDIC insured.

The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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