Thanks to P2P (Peer to Peer) payment services, like Venmo and Cash App, you can easily transfer funds to someone with just a few swipes on your phone.
Unfortunately, though P2P payment systems have become a breeding ground for scams. Read on to learn how to protect yourself from a P2P payment scam.
How do P2P payment scams happen?
There are many ways a P2P payment system can put you at risk, but the following two are most common:
1. The bogus buyer
A scammer will contact you about an item you’ve put up for sale. Together, you’ll arrange for an exchange of funds and goods. You’re notified the money has been sent to your P2P account and you hand off your merchandise. Sadly, you won’t realize you’ve been ripped off until a few days later when the money transfer doesn’t clear. Since most transfers take one to three business days to clear, you have no reason to think something is wrong with the transaction until it’s too late. Unfortunately, at this point, there’s no way to get your money back.
2. Publicized payments
Venmo is the only P2P app with a built-in social networking component. Every Venmo transaction you make is public information. Your payment amounts are private, but anyone can track your spending habits. This makes Venmo users super-vulnerable to scammers.
Venmo allows you to tweak your privacy settings to keep information private, but most people neglect to do so. Recently, the FTC ruled that Venmo must make this detail clearer to users. Venmo has since created a popup tutorial for new users to demonstrate how to keep transactions from going public.
Keep your money safe from P2P scams with these simple steps:
- Only send money to people you know and trust.
- Never use a P2P service for business-related transactions.
- When using Venmo, turn on the privacy settings and opt-out of public tracking.
- Carefully read terms and conditions of a P2P service before using.
- Always choose two-factor identification and use a PIN when possible.
- Accept all security updates offered by the P2P app you use.
- Check your recipient’s information carefully before completing a money transfer.
- Choose to be notified about every transaction.
Your Turn: How do you feel about P2P?