Peer-to-peer payment scams & fraud: How to protect yourself

Peer-to-peer (P2P) payment apps offer simple and convenient ways to send and receive money. You might not call them P2P apps. But you’re probably familiar with names such as Zelle®, PayPal®, Venmo, and Cash App.

P2P apps are, by and large, very safe. But like any payment method, it’s still important to be careful with your personal information and your money. Keep reading to learn more about how you can protect yourself—and what to do if you find out you’ve been scammed.

P2P fraud vs. P2P scams

The terms scam and fraud are often used to mean the same thing. But there’s a difference.

In general, fraud happens when someone accesses or uses your account without your permission. Scams happen if you were tricked, but you were still the one who approved a payment. Basically, fraud involves unauthorized transactions. Scams involve authorized transactions.1

The difference is important, because the same protections aren’t available if a transaction is authorized. That means there may not be much that can be done to get your money back. Even if it was a scam or a simple mistake.2

What are some common P2P frauds and scams?

Many P2P apps allow you to send money with just a single click or swipe. That speed gives online thieves chances to take advantage of users who aren’t paying attention. In the past, many asked to be paid using gift cards. These days, they’re using many of the same tricks—but asking for payment over P2P apps instead.3

Here are some common scenarios to be aware of:

  • Unauthorized electronic fund transfers: If money leaves your account and you weren’t the person to send it, it might be what’s known as an unauthorized electronic fund transfer. This fraud can be the result of a hacked account, a compromised card number or a stolen device. Or it could be that someone accessed your account through a phishing scheme.4
  • Seller scams: These scams can take many forms. They may start with offers for tickets, marked-down merchandise or even cute puppies. It could be anything. But they all have one thing in common: The item for sale is unlikely to ever be delivered to your door.5
  • Buyer scams: You might be asking, “How can you get scammed if someone sends you money?” It might seem odd, but it happens. They’re known as overpayment scams. They often start with something you’re trying to sell online and a bogus check to buy it. The scammer will overpay and then ask for a refund of the difference. When the check bounces, you’re on the hook for the amount of the bad check—and the item you were trying to sell might be gone too.6
  • Money mule scams: These types of scams come with an added twist: Getting caught up could also result in legal trouble. That’s because it’s a scam used to launder money. The scam can involve fake dating accounts, work-from-home schemes or phony prizes. Scammers send money, and then ask victims to send it to another person. What they won’t tell you is that the money is stolen—or that the reason you’re sending it is made up to provide cover for illegal activity.7

These are just a few examples of P2P scams and fraud. They can also occur with other payment methods. So no matter what you’re buying or selling—or how you’re buying or selling it—if something sounds too good to be true, it probably is.

How to avoid payment app scams

While scams and fraud may not be 100% avoidable, there are steps you can take to protect yourself. It’s important to be careful, because once you send a payment, you may not be able to cancel it. And there may not be protections in place to help you get it back.8

Here are a few tips from Zelle® that might help—no matter what P2P app you’re using:9

  1. Pay it safe: Many P2P apps don’t let you cancel a transaction once you’ve sent it to another user. With that in mind, avoid sending or requesting money from anyone you don’t know and trust.
  2. Take your time: Try not to rush when you’re using a P2P app to send money. If someone is pushing you to act quickly, it could be a red flag.
  3. Treat payments like cash: Money moves quickly when you use P2P apps. Once you hit send, money doesn’t take long to reach its destination. It’s a good idea to double check you have the correct info to make sure your money goes where you intended.
  4. Use your security settings: P2P apps have measures in place to help keep your account secure. Enable them. One example is multifactor authentication. Sometimes called two-factor authentication, it requires you to provide multiple pieces of information to access your account. The first is typically your username and password. The second step might require you to enter a numeric code you’re given in an email or text. Or you might use fingerprint or facial recognition.10
  5. Let your bank help: Take advantage of fraud alerts if your bank offers them. Capital One lets you set custom alerts and will automatically notify you if there’s something that needs a second look. But remember, it’s also important to keep an eye on your account yourself. Get in touch with your bank immediately if you suspect something is wrong.
  6. Be aware of phishing: One way fraudsters might try to access your account is by posing as your bank or a P2P company. They may try to contact you through emails, calls or texts. Avoid clicking links and sharing personal information. They may also claim you need to download another app or give them remote access to transfer money. Never give remote access to a third party.
  7. 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.
  8. Protect your passwords: Use different passwords for P2P apps and other sites. If you’re worried about remembering them all, there are tools available that might be able to help. And like the tip about your personal information, don’t share your passwords with others.
  9. Be safe on public Wi-Fi: Public networks make it easy to connect on the go—and to save data on your monthly phone bill. But the Wi-Fi at places like your local coffee shop or library might not be secure. Read advice from the Federal Trade Commission (FTC) about ​​how to safely use public Wi-Fi to help protect your information.

What to do if you have experienced fraud or been scammed

Frauds and scams can happen to anyone. If you suspect you’ve been a victim, there are a few places you can turn.

  1. Contact your bank. Find out how to contact Capital One and learn what comes next.
  2. Contact your P2P company if you made the transaction using the company’s app.
  3. Report the scam or fraud to the government. You could start with the FTC. You may also want to report scammers directly to the FBI.

If you authorized a payment mistakenly, there may be limits on what can be done to get your money back. But reporting the information can help prevent it from happening again. And by knowing some tricks scammers use, you may be able to avoid problems in the future.

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