Identifying and Avoiding P2P Scams

With peer-to-peer payments (P2P), you can easily transfer money to someone from your bank account, debit card, or credit card using a website or mobile app such as Zelle, PayPal, or Venmo. P2P payments have become increasingly popular and simple to use. Unfortunately, the speed and convenience of P2P payments also makes them susceptible to scams and fraud. 

Scam and Fraud Difference

Fraud involves someone accessing your account without your permission and completing unauthorized transactions. Scams involve being tricked into authorizing a transaction or sending a payment. It's important to remember the difference, as the same protections do not always apply to both.

For example, fraudsters may reach out claiming to represent a fraud department or merchant and ask you to confirm information such as your account username and password or Social Security numbers. However, once you share this information, criminals may be able to create a P2P account with your information, steal your identity, and gain access to your accounts. In another example, scammers posing as a legitimate business may request a P2P payment for a product or service. Once they receive your money, you never receive what you paid for, and they disappear.

Protect Yourself

While scams and fraud may not be 100% avoidable, there are steps you can take to protect yourself when using P2P payment methods:

  • Pay it safe: Since most P2P apps don't allow you to cancel a transaction, treat payments like cash, and only send funds to those you know and trust.
  • Take your time: If someone is pushing you to act quickly with a P2P payment, it could be a red flag.
  • Use your security settings: Enable settings within the P2P applications, such as multifactor authentication (also known as two-factor authentication). Set up your two-factor authentication at Schwab.
  • Let your financial institution help: Fraud alerts can automatically notify you of activity, and always contact your financial institution immediately if you suspect something is wrong.
  • Be aware of phishing: Fraudsters might try to access your account by posing as your financial institution or a P2P company. If someone calls you unexpectedly and claims to be from your financial institution, it is best to hang up and call your financial institution at the number printed on your statement rather than the number that called you.
  • Use unique passwords: Use different passwords for P2P apps and other sites, avoid sharing your passwords with others, and consider a password manager tool if you have trouble remembering passwords.

Victim Next Steps

If you suspect you've been a victim of fraud or scams, there are steps you should take.

  • Contact your financial institution to report the matter.
  • Contact the P2P company if you made the transaction using a company's app.
  • Report the crime to your local police, whose report may be helpful in recouping any losses, as well as to the FBI's Internet Crime Complaint Center.
  • If you authorized a payment mistakenly, there may be limits on what can be done to get your money back. But reporting the matter can help you to understand what options may be available.

Educate yourself by visiting other resources on our SchwabSafe Learning Center, where you can read additional guidance on avoiding scams and other threats such as phishing attacks, and identity theft. If you need to discuss concerns or have questions regarding your account, contact your Schwab Financial Consultant or call 800-435-4000.