Venmo, the person-to-person payment smartphone app, is a big hit with millennials and scammers alike, due to the app’s potentially dangerous “reversal” option.
Venmo links to a credit card or a bank account and lets its users send or receive payments. For example, instead of splitting a bill three ways while at dinner with friends, one person picks up the tab and everyone else pays them back over Venmo.
But reporters at NBC Owned Stations across the country found some users who say they got digitally burned.
“This person was very eager to buy the car,” said Craigslist seller Alex Wilburn. “I met him right here at the mall.”
Wilburn says the buyer who responded to his Craigslist ad for this 2001 Acura sent him 1,800 dollars via the app.
“The way Venmo works is if somebody transfers you money, you see it in your account and you think it’s there to stay,” said Wilburn.
Wilburn then signed the title over and drove back to his apartment to help his customer replace the tags. Then, the new owner drove off.
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Twelve hours later, Wilburn says he got an email from Venmo saying the payment had been stopped.
“And then I actually saw the money out of the Venmo account reversed and sent back,” said Wilburn. “I couldn’t believe it.”
In Connecticut, several sellers accept payments through Venmo on items for sale on Craigslist. Craigslist advises its users to deal locally, face-to-face, and to never give out financial information such as a bank account or payment apps like Venmo or Paypal.
“People think it’s instantaneous, and it’s actually not,” said Fatima Hasan of San Jose, California.
Hasan says she’s out 900 dollars for the three football tickets she sold. Even more frustrating to her is how, she says, Venmo responded.
“I’m mad,” said Hasan. “I’m very mad that Venmo didn’t do anything.”
Venmo spokesperson Josh Criscoe told NBC there is no buyer or seller protection, and that the app is designed for payments between friends and people who trust each other.
Venmo’s user agreement also says “personal accounts may not be used to receive business, commercial or merchant transactions.”
Criscoe added any business usage of Venmo requires an application and explicit authorization.
The company also said it recently implemented alerts within the app, designed to protect users and discourage activity that violates their user agreement.
It's never been easier to split the check at dinner. Popular apps like Venmo and PayPal put you just a few taps away from sending money to a friend in a flash. No more awkwardness of fumbling around with a pile of credit cards or trying to break big bills.
But by taking advantage of these easy to use peer-to-peer payment apps, you also put your banking info at a slight risk of hacking. How can you protect yourself when using money-sharing apps?
"The best you can do is raise the bar so high, there is no practical way to exploit an issue easily," says Jason Glassberg, a cybersecurity expert and co-founder of Casaba Security. "Think of hackers like car thieves—they're much more likely to steal a vehicle with the key in the ignition and windows down than one that's locked and alarmed."
Follow these tips to secure your accounts when using Venmo, PayPal, and other money-sharing apps and keep scammers at bay.
01 of 08
Create a Complex Password
Many of us are guilty of using the same memorable password everywhere we need to log in. However, a strong, unique password for your money-sharing apps can protect your financial accounts—even if someone happens to steal your data somewhere else.
"Your password should be long and confusing, but also memorable to you. Use special characters, a mix of cases and numeric substitutions, like a zero instead of an O or a 3 instead of E," advises Glassberg.
You could also try using a password generator, such as LastPass, to string together a complicated combination of characters and cut down your risk of hacking.
02 of 08
Set Up Two-Factor Authentication
Most peer-to-peer payment apps now allow users to strengthen their security with two-factor authentication. This means you have to submit your password and an additional piece of information, usually an SMS message with a special code (just to prove it's really you!), before you can make a payment.
"Even if someone knows your username and password, they won't be able to log in unless they also have your phone, as well," says Glassberg.
Dig into the settings of your account to activate two-factor authentication.
03 of 08
Link Credit Cards, Not Debit Cards
Got your debit card or bank account linked to your money-sharing app? You might want to swap it out for a major credit card instead, says Glassberg.
"Credit cards have way more protections in place than bank accounts and debit cards," he says. "While the rules and regulations vary by state, you generally won't be responsible for more than $50 in unauthorized charges on a credit card."
You could be on the hook for the full amount a thief spends on your debit card, though. Even though many peer-to-peer payment apps slap on a 1 to 3 percent processing fee to use your credit card, the charge might be worth the peace of mind in case something goes wrong.
04 of 08
Secure Payments Outside the App
When you're sending money through an app, the network you're using plays a big role in protecting your info.
"Doing it over password-protected Wi-Fi or on your cellular network raises the bar against hackers by 1,000 percent," says Glassberg. "It's much easier for hackers to intercept data when you're using a free wireless network at an airport or coffee shop."
Keep your apps and operating system up-to-date, as well. These updates patch vulnerabilities that may have been present in earlier versions of the software.
05 of 08
Accept Notifications
No one loves being bombarded by notifications on their phone. But when it comes to money-sharing apps, it's worth turning on the alerts so you can catch fraud the moment it occurs.
"The more info you have about what's going on with your account, the better," says Glassberg.
Most banks and credit card companies can send you text messages every time a purchase is made on your account. Setting up these notifications can help you monitor your accounts for suspicious activity, as well.
06 of 08
Log Out of the Apps
Once you send a payment, don't just swipe out of the app. Take an extra moment to officially sign out of your account.
"Logging out is as important as having a strong password," says Glassberg. Until you log out, your session is still active and someone could potentially steal your information."
Sure, it's a little tedious to sign in every time you want to send a friend some money, but that extra step could prevent a would-be hacker from stealing your hard-earned cash.
07 of 08
Triple-Check the Details
When you send a payment, the money instantly leaves your account and you can't reverse it. Triple check all of the details to make sure the money's going to the right place.
Fraudsters can impersonate your contacts by creating an account that looks nearly identical to a friend's account, with perhaps just one number or character off, warns Glassberg. If you have any uncertainties about the person you're trying to send money to, give them a call to confirm the details.
08 of 08
Consider Using a Dedicated Payment Device
If you've ever experienced the headache of a hacked account, you might be looking for extra ways to boost your security. Consider using a separate smartphone exclusively for payments and online shopping, says Glassberg.
"If you're not running other software, playing games and going to lots of websites, you're less likely to get malware that can steal your info," he explained. "The couple of hundred bucks another device might cost seems like a worthwhile trade-off for the protection."
Don't want to spend the money on a new device just for payments? Bring one of your old phones out of retirement. Just wipe off all the data, install the latest operating system and updated payment apps, and use that whenever you want to send money.
Taking steps to protect your accounts might make money-sharing apps less streamlined. But think of it this way: A little extra effort now can save you a major financial headache down the road—and keep your money where it belongs.