How to Protect Yourself from Online Scams on Payment Apps

While these platforms are useful and convenient, it’s important to make sure that they are used appropriately, as online scams relating to peer-to-peer (P2P) payment platforms are on the rise.

According to Consumer Reports, “While P2P payment apps have proven popular, users can lose money when they accidentally make an erroneous payment or fall victim to fraud or scams. CR’s survey found that of those who use P2P payment services at least once per week, 12 percent had sent money to the wrong person and 9 percent had been the victim of a scam.”

That’s why it is so important to carefully review whom you are sending money to when using these payment services and to never pay someone you do not know or trust. When conducting these transactions, you are authorizing them, meaning that if you fall victim to a scam or send money to the wrong person, it maybe be difficult or unlikely that you will get your money back.

To protect your personal information and your accounts, here are six P2P scams to beware of:

1. Phishing scam

In this situation, a scammer will pose as the P2P service and send you an email or text message claiming that your account has been “suspended” or “locked.” This text message will be very deceiving and look like it came from the P2P service. The message will ask you to click on a link that can install malware or trick you into entering your account information.

2. Password scam

In this P2P scam, a scammer will act as a “representative” of a credit union or bank and will reach out to a target via text, asking if they approve a recent large P2P transfer from their account. This is one of the most common types of Zelle scams. Once, the target responds with a quick “no”, the scammer will call the victim, again posing as a representative of their financial institution, and offer to assist them in reclaiming the allegedly frauded money. To do so, the scammer claims that the victim will need to share their online or mobile banking login credentials and authentication codes. Unfortunately, if the victim shares the one-time passcode, the scammer will have the info they need to change the password and access the victim’s Zelle account. The scammer will then have access to send money through the victim’s account.

Remember, Jovia will never call, text, or email you directly and ask for account information such as usernames, passwords, or authentication codes.

3. Mystery money

In this P2P scam, a stranger “accidentally” sends the target money and then reaches out to them, asking for their money back. The target will see these funds in their P2P account and willingly return the funds. Unfortunately, though, because this money was added to the target’s account using a stolen credit card or checking account, the platform will ultimately flag the transaction as fraud and remove the funds. If the victim has already forwarded the funds to the scammer, the platform will hold them accountable for the funds and potentially block their account.

4. Fake customer representative

This is one of the most common types of CashApp scams. In this scam, a target who is having trouble with a transaction on a P2P platform will inquire about assistance on social media, usually in a public way through comments or mentions. A scammer will see that inquiry and then reach out to the target, claiming to represent the platform and offering assistance. If the target falls for the ploy, they will then be directed to a bogus support site where they’ll be asked to enter their account details or credit card info. This, of course, leaves the victim open to identity theft and financial loss.

Tip: Never reach out to a business or financial institution asking for help in the comments on a public social platform.

5. Utility scams

Utility scams that are pulled off via P2P platforms follow the same script as the classic scam in which an alleged rep from a utility company reaches out to a target, claiming their service will be shut off unless a payment is immediately made. In this variation, the scammer insists on payment via a P2P service. Unfortunately, once the payment is made to this “service rep,” it can be impossible to reclaim the funds.

Here are some red flags to look out for to recognize a scam:

  • The text comes from a number that’s not the typical five or six-digit “short code” of the business.
  • They are requesting personal information such as usernames, passwords, and authentication codes.
  • Requesting a rush payment.
  • Instructing to only pay through only one peer-to-peer platform.

Stay safe from peer-to-peer scams:

P2P services are enormously convenient, but each transaction carries the risk of fraud. Use the tips outlined here to stay safe from P2P scams.

Follow these rules when using P2P platforms:

  • Only send and accept funds from people you personally know and trust.
  • Never share account information such as usernames, passwords, or authorization codes.
  • Always confirm that you’re interacting with the correct person by verifying their phone number at every stage of the P2P transaction process.
  • Call the P2P platform’s customer service number directly to resolve errors. Similarly, reach out directly if you receive notification of an allegedly frauded account activity.
  • Update these payment platforms and device software.
  • Set up account alerts to receive notifications for large withdrawal/deposit no and low/high balance alerts. Learn how to set up account alerts here.
  • Monitor your accounts and transaction history on a regular basis.

If you or someone you know has fallen victim to a peer-to-peer payment scam, you can report it here.

McCauley, M. (2023, January 23). Consumer Reports Finds Peer-to-Peer Payment Apps Offer Ease and Convenience but Pose Potential Financial and Privacy Risks for Users. Consumer Reports. Retrieved June 22, 2023, from https://www.consumerreports.or...