Beware of These Contactless Payment Scams
Contactless payment, also known as tap-to-pay, has become a fast, easy, and relatively common way to make transactions using a smartphone or credit card. It uses near-field communication (NFC) technology to transfer data between your device and the payment terminal when they are within close proximity (up to 2.5-5 cm).
While NFC technology provides additional security (for example, by transmitting a virtual account number instead of your actual card details), fraudsters have found ways to exploit contactless payments to steal money from unsuspecting victims. These “phantom interception” schemes can use both cards and mobile wallets.
How contactless payment scams work
According to the Better Business Bureau , scammers exploit a potential victim’s proximity and inattention to detail. They assume the scammer can encounter you in a crowded public place and get close enough to conduct a contactless transaction without your knowledge. (It’s unclear how often scammers target contactless payment terminals.)
However, other types of wiretapping involve you being proactive and ignoring warning signs of fraud.
For example, scammers may pretend to sell goods or collect small donations for charity using contactless payment, but in reality charge a much larger amount to a fraudulent organization. They rely on you not carefully reviewing the transaction information before paying, or they rush the process and don’t issue a receipt.
In one case reported to the BBB fraud tracking system, victims were targeted by door-to-door scammers claiming to be selling chocolate for charity. The transaction amounts were hundreds of dollars, but the victims had no access to the money before the scam occurred.
How to avoid contactless payment fraud
As with any scam, vigilance is crucial. Tap-to-pay is fairly simple and seems automatic, and you’re less likely to stop and check your details than you are when swiping or entering credit card information. Always slow down and check the merchant’s name, transaction details, and tip amount before taking out your phone or card (again, too close proximity can trigger tap-to-pay). Be wary of any merchant who tries to rush you, obscures their screen, or refuses to issue a receipt.
You can also set up transaction alerts with your bank or credit card company to instantly monitor any suspicious charges. If you receive a notification about a “test” charge, this could also be a sign of fraud.
Finally, while scammers likely aren’t secretly scanning cards en masse for contactless payments, you can protect your cards by using a special case or wallet that blocks radio-frequency identification (RFID). You can disable NFC on Android in Settings (search for “NFC”). On iPhone, you need to enable Airplane Mode to block NFC.