The Risks of P2P Payment Apps

One common scam starts with a text message that appears to be from your bank, asking if you want to authorize a payment. If you respond "no," an imposter posing as a bank representative might call you, claiming there has been an account breach or some other urgent issue. They will then ask for personal and account information, such as your username and password, as well as the one-time code often sent to your phone to verify access. With these details, the scammer can associate their device with your account, giving them control over your P2P app and, potentially, your bank account.

The "overpayment" scam has also become common. In this scenario, a scammer "accidentally" sends you what appears to be a payment and then asks for a refund. Typically, these initial payments are made with stolen credit cards, and the P2P platform will eventually cancel them. But if you return the funds before that happens, you will be left with a loss.

A third common scam involves fake invoices or requests for payment. Scammers might send you a message pretending to be a friend or a business you trust, asking you to send money for a bill or a purchase. They often use urgent language to pressure you into acting quickly, without giving you time to verify the request. These scams can be particularly convincing because they may mimic a legitimate communication, and they create a sense of immediate need.

To help protect yourself against fraud:

• Verify unexpected requests: If you receive an unusual inquiry from your bank or an unexpected payment request from a friend or business, do not respond. Instead, call a verified number to confirm the request. Do not use the contact information provided in the message.
• Be wary of urgent requests: Scammers often create a sense of urgency to pressure you into acting quickly. Always take your time to confirm any requests before sending money.
• Don't share personal information: Never share your username, password, or one-time codes over the phone or via text, even if the person claims to be a representative of your bank.
• Check before you click: Unlike traditional bank or credit card transactions, P2P app transfers are like sending cash. You typically can't cancel or reverse a transaction, so double-check the recipient before you send money.
• Enable enhanced security settings: Enable two-factor authentication to confirm your identity with a password and a verification code. If your payment app allows it, set up a password, personal identification number (PIN), facial recognition, or fingerprint for each transaction.
• Sign up for alerts and monitor regularly: Fraud alerts can give you automatic notifications of suspicious activity. Also, be sure to regularly check your account statements for any unusual transactions.

In the event that you find yourself the victim of a payment scam, take immediate action. Report the incident to your financial institution and the P2P company through which you made the transaction. Reporting it promptly may increase your chances of recovering the funds. Additionally, report the scam to the Federal Trade Commission (FTC) and the Internet Crime Complaint Center (IC3) to help prevent future fraud.

By being aware of these common scams and taking these precautions, you can help protect yourself from financial loss and enhance the security of your transactions.