Peer-to-peer payments, or P2P payments, allow consumers to transfer money using their bank accounts, debit cards, or credit cards through a website or mobile app such as Cash App, Google Pay, Paypal, Remitly, Venmo, and Zelle. It’s like sending cash and the transfer usually requires just a few clicks.
Although P2P payment services can be easy to set up, simple to use, and are generally secure, it’s important to be aware that criminals may try to scam you into sending money.
Be on the lookout for some of these common scenarios:
- Scammers impersonating your bank may call to alert you about “suspicious activity” on your account and direct you to send money to yourself or “the bank’s address” to reverse a transaction or to verify the account is not frozen. However, your bank will never tell you to send money to anyone, not even yourself. Criminals try to make you believe you’re sending money to yourself, but you’re actually sending money to the impostor.
- Fraudsters may reach out claiming to represent a fraud department or merchant and ask you to confirm information such as your bank account username and password, credit card or debit card data, or Social Security numbers. But do not share this information — scammers want to create a P2P account with your information, steal your identity, and gain access to your accounts.
- 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. Treat P2P payments like cash — don’t pay until you receive the product.
- You accept a work-from-home position and the new company sends you a check to deposit, then asks you to send all or part of the funds to someone else using a P2P service. Do not deposit the check — the company is a scam and the check will bounce, leaving you on the hook for the amount of the fake deposit.
- A scammer “accidentally” sends you money on a P2P service and asks you to send the money back. Never send back the money, and instead contact the P2P service about the error. Criminals’ accounts usually use stolen funds that the P2P payment service will eventually flag as a fraud. If you send money back to the scammer, the P2P service could take funds out of your account or hold you responsible.
- Con artists may ask to borrow your phone for a contrived emergency. Do not hand over your phone to strangers, as they could make financial transfers using your payment apps and accounts.
10 do’s and don’ts to protect yourself:
- Don’t send money to someone you don’t know or have never met in person.
- Don’t share bank authentication or verification numbers or your personal information with anyone who contacts you, even if caller ID indicates it’s a familiar company. Keep your account usernames and passwords, Social Security number, and bank account, debit, and credit card information to yourself. If you’re pressured or have any concerns, hang up and contact your bank directly using the number on the back of your card or on your bank statement.
- Don’t let any strangers persuade you to send money to yourself or to anyone else.
- Don’t let anyone you don’t know borrow your phone.
- Don’t do a Google search for customer service phone numbers. Scammers have created fake websites with toll free numbers that connect to them. Only call your bank using the number on the back of your card or on your bank statement.
- Do be sure to know and trust the other party who’s receiving your money. Confirm the name, email, phone number, or applicable identifier when you transfer money. If you make a mistake, even one wrong digit, you will send your money to someone else who may not give it back. Just like handing someone cash, your bank can’t get it back for you.
- Do set up alerts to notify you of any transaction on your account.
- Do enable multi-factor authentication — a step to verify who you are, like a text with a code — for all accounts and do not share the verification codes with anyone, including anyone claiming to be the bank.
- Do ensure that any bank or P2P app you use is updated so it is secure.
- Do be wary of accessing any financial or personal information on public Wi-Fi or mobile hotspots. They often lack security and hackers can capture sensitive personal information on these open servers.
If you are a victim of a P2P payment scam:
For more information, check out tips about using P2P paymentsfrom the ABA Foundation.
Steve Kenneally
Senior Vice President, Payments
Contact Steve
FAQs
P2P payment cons
Scams: Like any method of payment, risks from scams remain. However, P2P payments are like cash. They typically process within minutes and cannot be canceled or reversed once sent so if you fall for a scam, you may not be able to get your money back.
How can you get your money back if you send a P2P to the wrong person? ›
Since P2P is the equivalent of giving someone cash, it is extremely important you only send money to someone you know. If you send money to the wrong person, that money is gone. You cannot get it back. Typically, a fraudulent seller will use terms like “act now or you will miss out” or may otherwise come off as pushy.
What are two precautions you should take when using P2P apps? ›
How to Protect Yourself from P2P Payments Fraud
- Pay and receive money only with people you know. ...
- Add a PIN or two. ...
- Use a protected payment source. ...
- Security and user experience. ...
- Keep your app up to date. Hackers exploit security vulnerabilities sometimes faster than the security pros can plug them.
Confirm before you click: Unlike traditional bank or credit card transactions—which you may stop payment on or dispute—P2P app transfers are like sending cash. Typically, you won't be able to cancel or reverse a transaction after it's processed, so make doubly sure you've got the right recipient before you hit send.
How can you lose money in P2P payments? ›
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.
Can you lose money in P2P lending? ›
Potential Defaults – As you may have observed above, the vast majority of P2P loans are unsecured. This means they have no collateral backing them. Further, these are loans to individuals. Your investment will evaporate if a borrower defaults, especially if it's early in the term of the loan.
How do I recover money sent to a scammer? ›
Contact the company or bank that issued the credit card or debit card. Tell them it was a fraudulent charge. Ask them to reverse the transaction and give you your money back.
Can I get my money back if I sent it to the wrong person? ›
It is not possible to get the money back without the consent of the wrong beneficiary. The process is a little tough, but he/she has to accept that there was a wrong transaction made to his/her account. Then, you need to contact your bank and communicate the matter in detail.
How do I revert my money if I mistakenly sent to someone else account? ›
Seek Assistance from Your Bank: Contact your bank and inform them about the wrong transaction. Provide them with all the necessary details and documentation. They can help initiate the chargeback process to recover the transferred funds.
Is it risky to do P2P? ›
Is Peer-to-Peer Lending (P2P) Safe? Peer-to-peer lending is riskier than keeping your money in the bank, but the interest rates are often much higher. This is because people who invest on peer-to-peer lending sites assume most of the risk, without the backing of a bank or the Federal Deposit Insurance Corporation.
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.
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.
Can I dispute a payment if I was scammed? ›
If you paid a scammer with a credit card:
Your card issuer must acknowledge your dispute within 30 days. After receiving your dispute letter, the credit card company has 90 days to resolve your issue [*]. The company must notify you in writing of its decision with a full explanation.
Can I cancel a P2P transfer? ›
As long at the recipient has not yet collected the P2P payment, the payment may be cancelled. 1. If the recipient does not collect on the payment in ten days, the payment is automatically cancelled and notifications will be sent.
Can you cancel a P2P order? ›
Only BUYERS able to cancel an order when the order status is Pending Payment or Coin Release in Progress. You may cancel P2P orders up to 3 times within 24 hours.
What are the risks of P2P payments? ›
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.
What happens if you dont pay a P2P loan? ›
If a borrower continues to miss payments, P2P lending platforms use their security check to recover the amount. The defaulting borrower must comply else platforms take legal actions against them. Next, they can file a case under Section 138 of the Negotiable Instruments Act, 1881, against a P2P loan defaulter.
