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Experts warn about scammers using payment apps to try and steal your money

Many people rely on cash-sharing apps like Venmo and PayPal to send and receive money. But this technology could also make you an attractive target for fraudsters.
App icons for Venmo, PayPal, Cash App and Zelle are seen on a smartphone.
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The holiday shopping season may be over, but scammers are still finding new ways to trick people out of their money. And they're turning to popular cash-sharing apps like Venmo or PayPal to do it.

According to the U.S. Federal Trade Commission, whenever there's an online data breach, fraudsters will line up to buy people's usernames and passwords. Then they'll try their luck at using those credentials to log into your cash-sharing app accounts, where you may have money stored.

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Personal finance expert Jenny Groberg, CEO and founder of BookSmarts Accounting and Bookkeeping, says hackers will also sometimes use technology to help them guess your passwords.

"[The technology] just keeps going through the code in minutes," Groberg explained to Scripps News. "It can use your login or your ID and just try different passwords. So the code being able to crack your password is probably very high."

In some instances where fraud is suspected, the companies that run those apps may send you an email alert to reset your passwords. However, the scammers often try to beat you to it by calling from untraceable numbers in an attempt to get you to punch in the security reset code.

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It turns out that what many people are now experiencing is actually a pretty typical form of fraud that the FBI says has been growing exponentially. Reported cases of online fraud have nearly doubled since 2019, and the money lost has almost quadrupled to $12.5 billion last year alone.

According to the 2023 FBI Internet Crime Report, one of the fastest-growing scams concerns people impersonating tech support — up 175% last year. So what can you do to protect your money?

The Federal Trade Commission recommends consumers set up two-step authentication on their money-sharing accounts. This means nobody will be able to reset your log-in without a unique code that's sent directly to you.

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Meanwhile, Cash-sharing apps like PayPal and Venmo remind customers that they should never share that code with anyone else — even if they call you and ask for it. The companies also warn customers not to fall for messages that appear to be coming directly from companies giving good faith advice — a message the Better Business Bureau is also reiterating.

"It all comes back to the good old fashioned impersonation scam," said Melanie McGovern, spokesperson for the BBB. "They're using big company names of apps we use every day, products we use every day, retailers we shop at every day, to confuse the customer into giving up information"

"It's really important to look at the app, understand like, 'hey, did I sign up for text message alerts?,'" McGovern added.