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P2P Payment Apps: Tips to Avoid Fraud

Reading time: 4 minutes

December 2nd, 2022

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Peer-to-peer (P2P) payment apps, including Venmo™, are convenient for sending money to family and friends. Because they're on your phone, it's easy to use them when you're on the go, they connect directly to your bank account, and there are often no fees associated with sending or receiving money. That convenience means many people use them for more than splitting bills and sending money to friends and family.

That convenience also means they're targets for scammers—and scammers are getting more and more creative. Want to use your apps safely? Read on for red flags to look out for.

"Can You Verify This Fraudulent Transaction?"

One common scam is fraudulent transaction verification. These scams often appear to be a text, email, or phone call from your bank. The scammer asks you to verify a transaction—usually a large transaction of $1000 or more so you feel a sense of urgency and will be more likely to fall for the scam, but some scammers will use smaller amounts, too. When you confirm you didn't initiate the transaction, they offer to reverse it if you share a one-time code with them. They may also ask you to send money via a P2P payment app to cover the difference while they sort it out.

Legitimate financial institutions won't ask you for a one-time code or P2P payment to reverse a fraudulent transaction. If someone asks you to do this, it's most likely a scam. Don't respond or click any links when you get one of these messages. Definitely don't share any account information, such as your email, PIN, or password.

If you're worried that it might actually be your bank or credit card company trying to verify a transaction, call the number on your statement or the back of your credit or debit card.

"I Sent You Too Much Money. Can You Send It Back?"

Another scam making the rounds on various P2P payment apps is when someone says they accidentally sent you too much money and asks you to send the excess back. This is a scam.

Often, the money they sent came from another person whose account was compromised. Once the other victim realizes their account has been compromised, they'll report it to the payment platform and have the charges reversed. By then, the scammer received their "overpayment" and changed their bank account, so you're left holding the bag.

To avoid this scam, only accept payment at the time of handoff and in exact amounts. You can also protect yourself by checking your (online) bank account by verifying that you have received the correct amount. Additionally, protect yourself by using payment methods which offer a payment protection feature, such as Meta Pay when selling on the Facebook Marketplace.

If someone sends you too much money through a payment app, don't send the money back. Instead, report the incident to the app's security team.

"I Need You To Confirm If You Made This Transaction"

Another common scam is when a scammer calls you, posing as your bank, saying that they need you to confirm that you made a recent transaction. It's a fake transaction, so you would say no, the fraudster then claims they will help you reverse the transaction if they're able to authenticate you. What's actually happening is the scammer is trying to log into one of your accounts and is trying to get you to provide them the one time security code.

This is a common tactic used by scammers to get a two-factor authentication code to get into one of your accounts, such as a P2P app, online bank account, or even your email. No one you interact with on a P2P payment platform needs to verify that you're not a scammer. If you receive a request like this, don't respond, and don't share any account information, such as your email address, PIN, or password. Instead, report the buyer to the payment platform.

Be wary of any requests for codes or verification from strangers online. If someone seems too eager to conduct a transaction with you, they're likely up to no good.

"Act Now to Get This Incredible Deal"

Scammers posing as legitimate businesses might request an advanced P2P payment for a product or service—often at a far lower price than you'd typically have to pay. Once you send the payment, they disappear, and you never receive what you paid for.

If something seems too good to be true, it probably is. So be careful of offers that seem too good to be true, especially in the context of online shopping. Treat P2P payments like cash; don't pay until you receive the product or service.

"Can I Borrow Your Phone? It's an Emergency"

In this scam, a stranger comes up to you on the street or in another public place and asks to use your phone for a contrived emergency. Once your phone is in their hands, they transfer money to themselves using your P2P or banking app.

Be careful about lending your phone to strangers. If someone appears to really need help, offer to make the call for them rather than handing over your phone. If you decide to lend your phone to someone, delete your payment and banking apps from the device first.

By following these simple tips, you can help protect yourself and your money from fraudsters looking to take advantage of unsuspecting users of P2P payment apps. These are some of the most common peer-to-peer payment scams, but remember: there may be others. It's important to watch out for red flags, only send money people you know, and never share personal information online!

The individuals and owners of any other trademarks, logos, brands or other designations of origin shown, named or mentioned herein did not sponsor, endorse or preview this article.

VENMO is a trademark and brand of PayPal, Inc., San Jose, CA.

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