The holiday shopping season is off to a record-breaking start. According to a report by the National Retail Federation, over 200 million people shopped online during the Thanksgiving weekend, the highest number ever. Cyber Monday sales were up 10 percent from last year. Shoppers spent an estimated $17 billion on Small Business Saturday, and donors contributed $3.1 billion to non-profits on Giving Tuesday.
Financial technology – or fintech – innovation was one of the engines driving this online sales boom. Flexible and easy-to-use payment technology enabled merchants to reach customers and helped shoppers navigate the holiday shopping season responsibly. As a result, fintech companies Block, PayPal, and Stripe, which are members of the Financial Technology Association where I am CEO, processed billions of dollars in transactions over the holiday weekend, and Buy Now Pay Later (BNPL) use reached an all-time high on Cyber Monday, contributing $940 million in online spending.
Send Money Safely This Holiday Season
Consumer demand for digital financial tools is expected to only increase during the rest of this holiday season. In addition to shopping online, sending money to friends and family has never been easier, with four in five Americans using a peer-to-peer payment app like Cash App, Venmo, or PayPal to send money, according to Nerdwallet.
But from texts to social media posts, scammers are looking to take advantage of shoppers. According to the AARP, three-quarters of holiday shoppers will encounter scams this season. Common scams include requesting a deposit in advance to secure a gift, impersonating a charity to solicit a donation, pushing shoppers to pay with gift cards, phony invoices, and phishing scams.
No one is immune from scams. Recently, I answered a call encouraging me to buy a gift card from a store I frequent. The caller was incredibly friendly and helpful until they asked where I banked and the PIN for my account. When I questioned why, they suddenly got angry that I was asking questions and had a sense of urgency for me to provide the information. Immediately, alarm bells in my head went off, and I quickly hung up and blocked the caller.
With several weeks still left in the holiday season, it’s important to remember a few tips to send money safely. Holiday shoppers can protect their money and personal information with a few simple steps.
- Trust your gut. If it sounds too good to be true, it probably is. Scammers want to pull at your heartstrings with images of a shiny new toy under the Christmas tree or a promise that your donation will make a difference at the children’s hospital. But it’s probably a scam if someone promises to deliver something to you later or asks you to pay with a gift card. Only send money to people you know and trust.
- Protect your information and stop scammers from accessing your email, bank, or payment accounts. You may receive phony invoices or phishing emails trying to get you to click on a link or take action on an email, all of which are attempts to steal your information. Use different passwords across accounts, keep all your login information up to date, and never share information like a Social Security number or login information with anyone.
- Secure your account by turning on two-factor authentication, staying alert for new device logins, and regularly checking your statements for suspicious activity or payments. Scammers want you to drop your defenses so they can steal your information. If you suspect you have fallen victim to a scam, the best thing to do is contact customer support in the app you’re using or through a verified channel.
Leading the Fight Against Financial Crimes
While scams tend to spike around moments like the holiday season, fintech companies take action year-round to stay one step ahead of financial crimes. Notably, the use of technology and partnerships helps fintech companies stay at the forefront.
- Consumer education and advanced security measures. Education is a significant tool to help consumers and merchants identify the signs of scams so they can prevent them in the first place. Fintech companies start with the mindset of deterring financial crimes through customer education and instituting policies and controls to make scammers think twice. Fintech leaders also deploy advanced measures like digital ID, data-driven authentication methods, and machine-learning risk models that detect and prevent financial crime.
- Strong consumer protections and law enforcement partnerships. Communication with law enforcement and engagement with partner banks play a critical role in fighting financial crimes across the ecosystem. Like other financial institutions, fintechs must comply with applicable consumer protections, anti-money laundering rules, and suspicious activity reporting. As a result, they take steps to share information, take action on prohibited activity on their platform, and report potentially suspicious transactions to the appropriate regulatory and law enforcement agencies.
During the holiday season and the rest of the year, fintech companies are taking action to help shoppers recognize and avoid payment scams so they can keep their money and financial information safe.
Disclosure: I lead the Financial Technology Association, a trade association representing companies providing digital payment tools, including Block, PayPal, Stripe, and several BNPL companies.