IOUs: ‘There’s an app for that!’

It’s a common joke, but it seems to be holding true.  We use apps to share pictures, check e-mail, and chat with friends—now, we have the ability to transfer money to our friends and family, regardless of our location or which financial institution we belong to.  Cash may have been king in the past, but it’s looking more like our smartphones are king today.

Have you heard of Venmo? Squarecash? These are just a few of the apps that allow you to send money to anyone, anywhere, anytime.  From a convenience standpoint, these advances are amazing—but what are the costs of convenience?

You may still think of identity theft as the result of sneaky thieves rummaging through your trash, gathering bank statements and those annoying credit card offers you threw out last week.  While this method is still common, it’s only one of the ways that thieves steal financial information today.  Why go dumpster diving when you can use hacking to gather financial information and access money electronically?


It’s important to protect your sensitive information regardless of whether you have $20 in the bank or $2,000 in the bank. Identity theft can damage not only your liquid assets (cash in your checking or savings account), but your credit scores as well. Even your criminal record can be affected by identity theft. Sounds crazy, but you could be arrested for a crime someone else commits while pretending to be you.  Every time you link your personal information to a website or an app, there’s a chance that information can be accessed and abused, so it’s important that you protect yourself.

Here are some tips to assess security risks of peer-to-peer transfer apps:

The Federal Trade Commission recommends that you look for three factors to help make your account(s) less vulnerable:

  • Two-factor authentication: This requires you to enter a password plus something else — like a code sent to your phone —  to prove it’s really you.
  • Pin code: Look at creating a pin to send a payment — like a pin you might use at an ATM.
  • Social media permissions: If a payment service is linked to social media, it could broadcast your payment history to your network so make sure you check those permissions.

Additionally, think about the protections built into your financial accounts. For example, some apps may charge you for using a credit card, but if something goes wrong you have more protection under the law by using a credit card than if you use a debit card or link a checking account directly.  To learn more about protections under the law for credit and debit cards, watch the Staying on Good Terms: Credit & Debt Webinar HERE.  Take the quiz to work towards your Borrowing Badge!

Know what happens if something goes wrong–will you get an e-mail explaining a new recipient, access from a new location/device or if your account information, like your associated e-mail, is changed?

Learning more about security features may not be fun, but 5 minutes could save you from identity theft which can take months or years to recover from.  Remember, knowledge is power!


FTC Tips, 2015:

More Information: Citizens Utility Board, 2013

Written by Carol Brobeck, University of Illinois USFSCO Student Money Management Center