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Identifying and Avoiding Peer-to-Peer (P2P) Payment Scams

Be Aware of Common Frauds and Scams Associated with P2P Payments

At a glance, peer-to-peer (P2P) payment applications appear to be the perfect solution for effortless money exchange between friends and family, whether you’re splitting the bill at a restaurant or paying half for a hotel stay. These apps — including PayPal®, Venmo®, Cash App® and Zelle® — allow users to send money to others within seconds, usually by connecting either a bank account or a payment card.

P2P payment technology, while convenient, comes with several inherent risks. Scammers prefer using tools that are easy to use, and this makes P2P technology an attractive exploitation method for fraud attempts.

How P2P Payment Apps Work
A P2P payment is essentially a digitized cash exchange. Users connect payment cards or bank accounts to their P2P payment platform of choice, after which they can send money to other users within seconds. Money received can usually be stored in a digital wallet provided by the app or transferred directly to a bank account, which may take a few days.

P2P payments are typically made via mobile apps, but most platforms can be accessed through a computer, too.

How to Recognize Various P2P Payment Scams
P2P payment scammers leverage the convenience and sparse consumer protections associated with P2P payment apps to dupe users into parting with their cash. These scams generally involve a bad actor who manipulates P2P app users into sending money to a fraudulent recipient for a deceitful reason. Examples include:

  • Imposter scams: A bad actor poses as someone trustworthy — from an IT specialist to a  family member and more — to convince a payer to send them money. This is a wide-ranging scam category that encompasses several other specific tactics. Some of these are covered next.
  • Romance scams: A bad actor poses as a prospective dating partner and requests cash from the user for reasons that often play off the user’s desires — for example, the scammer may ask for cash to book a flight to visit the user.
  • Overpayment scams: A bad actor “overpays” for something the user is selling, usually with a bad check. The scammer then asks the seller to refund the difference via P2P payment.
  • Investment scams: A bad actor tricks the user into sending money for an investment scheme that doesn’t exist. The scammer may promise unrealistic high returns on the intended victim's investment to entice the victim to part with their funds.

While these scam types vary in approach, they all share the same goal: the use of fraud to deceive an unsuspecting victim and take their money.

Tips for Avoiding P2P Scams
While P2P technology is convenient, use it with caution. Remember the following tips every time.

  • Send money to parties you know and trust.
  • Stick to trusted phone numbers.
  • Scrutinize unusual or urgent requests.
  • Avoid offers that seem too good to be true.
  • Implement security settings.
  • Avoid making payments through unsecure networks.
  • Report suspected fraud.

Have questions about scams? Please let us know.

While we hope you find this content useful, it is only intended to serve as an educational article. Products referenced above are examples and should not be construed as endorsements. Additionally, PayPal, Venmo, CashApp, and Zelle are all registered trademarks of their respective listed organizations.

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