Peer-to-peer (P2P) payment apps such as Venmo, Zelle, Google Pay, Apple Pay, Facebook Payments, and Cash App make sending money from your checking account convenient and easy. P2P payment apps were originally designed to be a fast way to give money to someone you know, such as a family member or friend. It has, however, become commonplace to use them when paying strangers online for goods and services and unfortunately, scammers have now discovered them. It’s very important to know how to avoid losing your money on P2P apps.
The Risk in Using P2P Payment Apps
What many consumers do not realize is that P2P services have limited, if any, fraud protection, and they do not offer the same consumer protections as a credit card, debit card, or even writing a check. Once the money is sent, it’s gone.
When you send money outside of your financial institution through a peer-to-peer app, it is under no obligation to refund your lost money. Instead, you are bound to the user agreement terms within the P2P app utilized for the transaction.
How to Avoid Risks When Using P2P Apps
The best way to protect yourself and your money while using P2P cash apps is to follow these guidelines:
- Send money only to people you know. Most P2P transactions are instantaneous and irreversible, a fact that scammers know and eagerly exploit.
- Don’t use P2P payment services for business purposes. The terms of service for most P2P apps actually prohibit their use for purchasing goods and services. Look instead for a payment app specifically created for business users like PayPal or Square Cash for Business.
- Always research the P2P app for customer service contacts and procedures before you use it. That way you’ll know what consumer protections are in place, if any, and where to go when you need help.
- Keep your P2P apps up to date. If you have outdated software, you could be missing important security patches that scammers can exploit. It’s always important to stay on top of any and all application updates.
- If you are a victim of P2P payment fraud, file a complaint. Companies accredited by the Better Business Bureau, including Venmo and Zelle’s operator, Early Warning Service, are required to respond to consumer complaints.
You can also lodge a complaint with the Consumer Financial Protection Bureau’s Consumer Complaint Database. The organization’s policy has been to report problems to companies for them to resolve.
Additionally, you can utilize Fraud.org’s secure compliant form. That information is then shared with more than 90 law enforcement and consumer protection agency partners.
Here’s the bottom line: Don’t send money to someone you don’t know. If the person on the other end of the P2P transaction is a stranger, stay safe and walk away.
For more financial safety tips from Police FCU, read our blog, “What to Do When Your Account Has Been Hacked.”
