The growing use of person-to-person (P2P) payments has brought a new level of convenience and speed to sending money to all people. It’s added ease to splitting the cost of lunch, paying your babysitter and more. No need to carry cash or calculate how to divide that $20 gift three ways.
Two of the largest P2P companies both reported nearly 50% increases in total dollars sent through their platforms in 2021.
But with that convenience and speed has also come some very creative – and unfortunately, effective – methods of separating P2P users from their money. As the volume of payments increases (using P2P or credit push payments), so do the number of times that fraudsters are successful, and like carrying cash and giving it to someone or having it stolen, when the money is gone, getting it back from the bad guys is a challenge.
“By following a few basic practices, users can help protect themselves from becoming a victim of credit push payment fraud,” said Tim Mill, head of Regions Payments.
How can you know that it’s safe to send money through these providers?
Here are a couple of tried-and-true pieces of advice that can help you make the best decisions.
Send to people (or businesses) you know
It’s unlikely that you’d just hand $100 to someone you don’t know, trust them to walk away and come back with that designer purse or concert ticket. But one of the most common scams is someone promising goods/services and then not delivering. The safest uses for P2P payments are with family, friends, and others you know and trust.
Your bank won’t tell you to send a P2P payment
If you get a message that claims to be from your bank and asks you to send money through a P2P provider, or that says you must send a P2P payment to avoid fraud, you can bet it’s a scam or fraud. Your bank will never tell you to send a P2P payment
Verify and verify again
When sending to family or friends (or anyone for that matter), it’s best to verify the number, email or ID they use for a given P2P system … before you hit send. Contact that person or business directly. If you’re sending to someone for the first time, you may be able to ask that they send a “request” from their app, although receiving a request does not always guarantee the transaction is legitimate.
Add additional security
If you haven’t – and if the provider offers – make sure that you establish a one-time passcode or multi-factor authentication to your app and/or account. Many platforms let you enter a code, PIN, or use biometrics to help provide another level of security on your account.
Check your transaction sharing status
Some apps default to sharing information – either within the app or occasionally on social media – when a transaction occurs. Think, “Amy1234 just paid Andy678 $40.” Check the permissions and setting in the app and on your social media to share only what you wish to share.
When sending money via a P2P app, assume the funds cannot be recovered once you hit send
When you use your credit or debit card to make a payment, you may have certain rights if you don’t receive the expected service/merchandise or have other problems with the underlying transaction. However, when you make a payment using a P2P provider, you may have much less recourse. Always assume, once the payment has been sent, that the funds are gone.
There is an army of people – from banks to P2P providers, to consumers, law enforcement and more – working to spot and eliminate fraud and scams using all types of payments.
But the best defense in this case, is the first line of defense – you. Before you hit “send” on your payment, remember:
- If it doesn’t feel right, listen to your gut – if you don’t feel right, there is likely a reason and a second round of verification can’t hurt.
- If you do feel like it’s fraudulent, contact your bank, the provider, local law enforcement or whomever should be notified (such as a sales platform, etc.). Do it before you hit send. Remember: once you press “send,” you’ve authorized the transaction to occur. The movement of money with these services can be instantaneous; your ability to recall your payment at that point is limited or non-existent.
- If you think you’ve fallen victim, contact the same authorities as in #2. No guarantees, but there may be ways to recover what you’ve lost. Act fast.