Peer-to-peer  (P2P) payment apps like Zelle, Venmo and CashApp enable users to conveniently send money quickly ⁠— and fraudsters aren’t afraid of exploiting them.

P2P related fraud has been on the rise in recent years, with bad actors finding creative ways to exploit P2P payment apps. These schemes include phishing, smishing, vishing, spoofing phone numbers, and listing non-existent goods for sale.

One prevalant example of P2P fraud begins with a text  message that appears to be from a financial institution or P2P provider. Upon responding, the user may receive a phone call from a spoofed number, asking for account security details. During this exchange, the bad actor triggers the multi-factor authentication (MFA) for the P2P service and prompts the user to provide the authentication code, thereby gaining full control of the account.

Another effective type of fraud involves listing items for sale on an online marketplace and then requesting advance payment through a P2P app, without ever intending to fulfill the order.

How to protect yourself from P2P related fraud:

1. Never share your password or multi-factor-authentication code with anyone. If someone asks for them, hang-up/don’t respond – it is a scam.
2. Most online marketplaces have their own preferred payment method AND best practices for avoiding scams. Someone asking for payment outside of those normal channels should raise a red-flag.
3. Remember the mantra: Hang up, Look Up, and Call Back. If you receive a call from a financial institution or P2P provider warning you about fraud on your account, hang up immediately. If you believe the call might be legitimate, look up the number of the organization supposedly calling you using a trust source. Then, call that number back to verify the authenticity of the call and discuss any concerns about your account.

How to protect yourself from P2P related losses:

Funds stored on these popular nonbank payment apps may not offer the same protections as traditional bank accounts and often lack deposit insurance, which could leave your money at risk if these companies fall under financial distress. Consider transferring funds into insured bank accounts until automatic sweeping is offered. Or, utilize Zelle as a safer alternative.

Have questions? We’re always here to help. Call us: (207) 839-4796.