Many of us have used a peer-to-peer (P2P) payment app to split a bill or send money to a friend, and some people even use them for traditional shopping. However, there are inherent risks that exist on these payment apps that everyone should know about.
First and foremost, because they’re as fast and convenient for criminals, as they are for consumers, P2P apps—like Zelle, Venmo and Cash App—are favorite tools for modern-day scammers. It’s also important to know that, even though they may be associated with your bank account, no fraud protections exist on P2P apps. Once you press send it's virtually impossible to get your money back.
Top P2P Scams
Impersonation scams: Criminals often persuade victims to send money by pretending to be someone they’re not. Thanks to artificial intelligence (AI)—with which scammers can clone real voices and faces—impostor scams are becoming even more common and more difficult to detect.
Fake seller scams: Criminals on Facebook Marketplace or another online platform advertise a fake product or service, collect your money upfront, then disappear without delivering the goods.
Advance-fee scams: They’re in trouble and need your help. In exchange for assistance, they promise a hefty reward once they retrieve their fortune.
Phishing scams: Phishers want you to click a link that allows them to install malware on your device or to record your Zelle or Venmo (or other app) credentials, which they can use to access your bank account. A common scenario, especially during the holidays, are delivery-related scams, often in the form of a “missing package” text that claims you have a lost package you can retrieve by clicking a link.
After the Fact
What to do if you are a victim of a p2pbased scam:
Staying Safe
The keys to staying safe when sending money this way is to avoid out of the blue requests for money and make sure you know the person on the other end. Think of P2P apps as cash. Before you hand over cash that you will never get back, you always want to know exactly who you are giving it to.
Be a fraud fighter! If you can spot a scam, you can stop a scam.
Report scams to local law enforcement. For help from AARP, call 1-877-908-3360 or visit the AARP Fraud Watch Network.
FAQs
It's also important to know that, even though they may be associated with your bank account, no fraud protections exist on P2P apps. Once you press send it's virtually impossible to get your money back. Impersonation scams: Criminals often persuade victims to send money by pretending to be someone they're not.
What is a risk of using the P2P app? ›
The real security concern is that P2P payment apps make it easy to send someone money, but they don't always make it easy to reverse or cancel a transaction. Because of this, criminals can use them to trick victims into transferring funds.
When using P2P apps one of the drawbacks is that? ›
Cons of Using P2P Payment Apps
Some let you send and receive money instantly, while for others, it can take several business days. Some P2P payment providers charge transaction or service fees. Refunds or disputes may be difficult to initiate, given the lack of middlemen.
What is one way you can protect yourself when using P2P apps? ›
Protecting Yourself From P2P Payment Fraud
Avoid transactions with sellers who have negative reviews or seem suspicious. Avoid Friends and Family Option: On some platforms, like PayPal, sending money using the "Friends and Family" option waives your right to buyer protection.
What is P2P risk? ›
The main peer-to-peer lending risks are: Yourself (psychological risk). Not enough diversification (concentration risk). Losing money due to bad debts (credit risk). Losing money due to a P2P lending site going bust (platform risk).
What are the major risk in P2P process? ›
Fraud. A lack of anti-fraud defenses during the different stages of the procure-to-pay process, as well as a few fraud prevention and detection mechanisms, can result in fraud. An example is invoice fraud through inflated, duplicated, or false invoices.
What are some of the dangers of using peer-to-peer P2P software? ›
These applications may also give unauthorized people access to financial or medical data, personal documents, sensitive corporate information, or other personal information. Files shared through P2P applications may include pirated software, copyrighted material, or p*rnography.
What is the security risk of a P2P network? ›
Denial of Service (DoS) Attacks: P2P networks can be vulnerable to DoS attacks, where an attacker overwhelms the network with traffic, causing it to become unresponsive or slow.
What is P2P drawback? ›
Disadvantages of P2P Lending
Default Risk: There exists a possibility of borrowers defaulting on their loans, causing financial losses for lenders. Regulatory Gaps: P2P lending lacks the stringent regulations characteristic of traditional lending, leaving room for potential fraud and unethical practices.
Why not to use P2P? ›
If you are on a network, even if just one computer becomes infected, it can spread to all other workstations on the network. Some unscrupulous P2P abusers even use other people's computers to remotely store illegal data, such as child p*rnography.
Some disadvantages of P2P networks are the following: Users can't centrally back up files and folders. Each computer can access other computers, which slows performance. Files aren't centrally organized into a specific shared area, but rather stored on individual computers.
What is a risk of using a P2P app? ›
First and foremost, because they're as fast and convenient for criminals, as they are for consumers, P2P apps—like Zelle, Venmo and Cash App—are favorite tools for modern-day scammers. It's also important to know that, even though they may be associated with your bank account, no fraud protections exist on P2P apps.
Is there anything you should be careful about when using a P2P payment app? ›
It is essential to be vigilant against potential fraud when using P2P apps. While both PayPal and Venmo offer protection against unauthorized transactions, users should always use best practices, such as verifying a recipient's details before sending money.
Why is P2P unsafe? ›
Malware Distribution: P2P networks can be used to distribute malware, as files are shared directly between users. This can lead to widespread infections if a user's system is compromised. Data Breaches: Since P2P networks often involve the sharing of sensitive information, they can be targets for data breaches.
What issues do P2P applications create for users? ›
Peer-to-peer sharing can result in access to your personal information, malware distribution and if your computer is on the institutional network and exposes student/faculty/staff information, both you and the institution may be liable.
What are the problems with P2P payments? ›
28% of P2P payment users say they have been scammed.
Meanwhile, 21% of users say they have received cash from the wrong sender. This type of error might appear innocuous on its face, but it is often the initiation of an intricate scam tricking users into laundering money from stolen credit cards.
Are P2P platforms safe? ›
In P2P pending, the risk is that some borrowers may not be able to repay the loan. However, RBI has set guidelines for P2P NBFCs to minimise such risks. P2P lending is riskier than FD (the reason for higher returns).
