While convenient, peer-to-peer (P2P) payment technology, such as PayPal, Venmo, Zelle, and CashApp, comes with several inherent risks, scammers prefer using tools that are easy to use, making P2P technology an attractive exploitation method for fraud attempts. Keep reading to learn more about how these features cause significant threats to everyday users and gain critical strategies to help you avoid becoming a fraud victim.
P2P payment applications appear to be the perfect solution for effortless money exchange between friends and family, whether you’re splitting the bill at a restaurant or paying half for a hotel stay. These apps allow users to send money to others within seconds, usually by connecting a bank account or a payment card.
Tips for Avoiding P2P Scams
While P2P technology is convenient, use it with caution. Remember the following tips every time.
- Pay and receive money only with people you know. Using mobile payment services with family, friends, and others you know, and trust is the safest way to protect your money. Don’t pay strangers with P2P. Many peer-to-peer transactions are instantaneous and irreversible. Scammers try to get you to pay them in many different ways - including by sending money online - so make sure you know to who you're sending money. If you use the service to receive money from someone you don’t know personally - maybe as payment for tickets to a concert or a game or for an item you're selling - transfer the money to your bank account and ensure the money is there before you send any goods. Scammers use mobile payment services to trick people into sending money or merchandise without holding up their end of the deal. For example, a scammer may sell you concert or sports tickets but never give them to you. Or a scammer might purchase an item from you, appear to send a payment, and cancel it before it reaches your bank account.
- Add a PIN or two. Each platform should have a way to add and require a personal identification number to complete transactions. Set up your app to require a passcode, PIN, or fingerprint before paying. Most mobile payment apps allow you to set up a passcode, PIN, or fingerprint that you can use to authenticate yourself before making a payment. Setting up this feature helps prevent anyone else who gets access to your mobile phone from making mobile payments from your account. If your mobile phone is lost or stolen, be sure to notify your bank or payment provider. For added protection, set one up on your mobile device, too, so in case you ever lose your phone, it’s not exactly like you lost your wallet as well.
- Use a protected payment source. Link a credit or debit card when using peer-to-peer payment services so that if your money is misdirected, you can have the error resolved by federal law. If you use funds kept in the P2P account, you are subject to state laws and the provider’s own policies, which can vary. It’s advisable to limit yourself to just one credit or debit card. Having multiple payment methods on a single account can make you a more lucrative target for fraudsters.
- Security and user experience. The service should be easy to use and understand and be secure. Most well-known platforms have good security in place, but you should still err on the side of caution. Avoid apps that have bad customer ratings and bad histories with data breaches. Peer-to-peer payment systems require access to your financial information, so check your account settings to see if you can enable additional security measures that aren’t on by default. Consider turning on multi-factor authentication, requiring a PIN, or using fingerprint recognition like Touch ID. Some cybercriminals may try to leverage usernames and passwords stolen in data breaches or purchased on the dark web to log into P2P apps.
- Keep your app up to date. Hackers exploit security vulnerabilities sometimes faster than the security pros can plug them. If you have old software, you’re missing the latest protections. Make sure you have auto-updates turned on for your device across the board.
Report P2P Fraud
If you find unauthorized payments or think you paid a scammer, here’s how to report it to the mobile payment app directly:
FAQs
Protecting Yourself From P2P Payment Fraud
Avoid transactions with sellers who have negative reviews or seem suspicious. Avoid Friends and Family Option: On some platforms, like PayPal, sending money using the "Friends and Family" option waives your right to buyer protection.
How can P2P fraud be prevented? ›
Protecting Yourself From P2P Payment Fraud
Avoid transactions with sellers who have negative reviews or seem suspicious. Avoid Friends and Family Option: On some platforms, like PayPal, sending money using the "Friends and Family" option waives your right to buyer protection.
What is one step you can take to protect yourself from P2P? ›
Keep your personal information private: If you use social media, avoid sharing things like your address, phone number and other personal details. And ignore friend requests from people you don't know. Protect your passwords: Use different passwords for P2P apps and other sites.
How do you keep your P2P account safe? ›
Set up alerts to notify you of any transaction on your P2P account. Enable multi-factor authentication – a step to verify who you are, like a text with a code – for all accounts and do not share the verification codes with anyone, including anyone claiming to be the bank.
How to make P2P secure? ›
To help keep hackers out of your P2P account, be sure to: Create a complex password when setting up your account. Add a second step (two-factor authentication) before money can be sent. Use a secure network (not free Wi-Fi) when using your P2P payment app.
Can P2P be tracked? ›
Doing this is a crime, something nobody should be involved in. IP numbers can be tracked, so illegal downloading isn't invisible; this sort of activity can be traced. Furthermore, some of this sort of P2P activity can also download a virus, malware or spyware onto your computer.
Can P2P payments be reversed? ›
P2P payment cons
Scams: Like any method of payment, risks from scams remain. However, P2P payments are like cash. They typically process within minutes and cannot be canceled or reversed once sent so if you fall for a scam, you may not be able to get your money back.
How can you protect yourself against sending a P2P payment to the wrong person? ›
To protect yourself when sending a P2P payment, use confirmation services, double-check recipient details, inform them in advance, and request a receipt confirmation to ensure a clear audit trail. The correct option is d. by contacting the recipient beforehand to tell them you're sending money.
What are the risks of P2P payments? ›
First and foremost, because they're as fast and convenient for criminals, as they are for consumers, P2P apps—like Zelle, Venmo and Cash App—are favorite tools for modern-day scammers. It's also important to know that, even though they may be associated with your bank account, no fraud protections exist on P2P apps.
How can you lose money in P2P payments? ›
The Risk in Using P2P Payment Apps
What many consumers do not realize is that P2P services have limited, if any, fraud protection, and they do not offer the same consumer protections as a credit card, debit card, or even writing a check. Once the money is sent, it's gone.
1. Know Who You're Sending Money To. The best way to protect yourself from fraud on a payment app is to only exchange money with people you know and have met in person. These apps are designed for sending and receiving money only with people you trust.
How do I block P2P connection? ›
One of the simplest ways to block P2P file sharing with firewall rules is to block the IP addresses and ports that are known to be used by P2P protocols and applications.
What is one way to avoid getting scammed using a P2P app or service is to only send money to _? ›
Send money to parties you know and trust
Only send money to people and organizations you know and have verified before. When you're in person, verifying that you're sending money to the right user can be easier. The person can confirm their profile information on a P2P mobile app before you authorize the payment.
How do you mitigate risk in P2P lending? ›
Mitigation: Understanding the liquidity terms of the P2P platform, opting for loans with shorter terms, or only investing what can be held until maturity can help mitigate liquidity risks.
How can you avoid losing money on P2P? ›
Confirm before you click: Unlike traditional bank or credit card transactions—which you may stop payment on or dispute—P2P app transfers are like sending cash. Typically, you won't be able to cancel or reverse a transaction after it's processed, so make doubly sure you've got the right recipient before you hit send.
