Digital Wallet Fraud

Anyone use digital wallets?  They are becoming an increasingly popular way to make payments due to the convenience and security features they offer.  However, along with the rise in usage of digital wallets comes the growing issue of digital wallet fraud.  Digital wallet fraud is any activity involving the unauthorized use of someone’s digital wallet to make purchases.  Did you know that a digital wallet can be set up on multiple devices?  Since that is the case, having a digital wallet on your device for payment options will not prevent a fraudster from being able to add that wallet to their own device as well.  For this edition of Fraud Friday, let’s learn about digital wallets; what they are, how fraud happens, and how we can protect ourselves.  What is a digital wallet?  Also known as an e-wallet or mobile wallet, a digital wallet is an advanced user-friendly app that acts as a digital storage space for all your payment methods.  They are marketed as secure ways to have payment information in one place essentially creating a central hub for managing financial interactions.  Users can add, edit, or remove payment sources such as debit/credit cards, bank account data, or gift cards.  The digital wallet stores the information input by the user and allows them to choose which option works best for the purchase they are making.  Everyone has heard of Apple Pay, Google Pay, Samsung Pay – those along with Cash App, PayPal, and Venmo are all examples of digital wallets.

 

Here are just a few ways digital wallet fraud can occur:
  • Account takeover/Social engineering/Phishing attacks
  • Malware attacks
  • Device theft or loss
  • Intercepting the plastic, changing the phone number on the account, setting up the wallet on a fraudster’s device with the one time pass code being sent to them.
  • Man-in-the-middle attacks where scammers intercept communication between the user’s device and the payment terminal.
  • Tricking a card holder into giving out their password.
  • Identity theft
  • Biometric vulnerabilities

 

With fraudsters using all those methods to steal information, how can we safeguard our digital wallets?
  • Source verification:  Only download apps from trustworthy sources (such as your official app store).  Be sure to avoid apps from a third-party platform as they may not have the same security features of a legitimate source.
  • Enhanced authentication:  Most digital wallet apps have extra security features you can utilize to help protect your information.  Using a PIN, facial recognition, or MFA will add an extra layer of security and ensure that only someone who is authorized can access the digital wallet.
  • Network consciousness:  Avoid using public WIFI at all costs!  Using a public network is just like opening the door to a hacker and letting them have their way with your information.  Whenever possible, use secure and private networks to mitigate potential fraud.
  • Regular monitoring:  Early detection of unauthorized transactions allows you to take swift action, check your accounts daily for anything suspicious.

 

As technology continues to evolve, the battle against digital wallet fraud still persists.  By knowing what to look for, staying educated and informed, and being ever so careful with your information, you can reduce the likelihood of becoming a victim.

Tara Montgomery

Fraud Specialist

The Exchange Bank of Alabama