Help Protect Yourself from P2P Payment Scams

Remember these three guidelines when using peer-to-peer payment apps like Venmo®, Apple Pay® and Zelle®.

Don Milne Oct 10, 2019

For the better part of two decades, the use of personal checks as a form of payment has seen a steady decline. Some people with a checking account don’t even have checks to go with it.

Now another form of payment is becoming increasingly rare. A 2019 CNBC report noted that three in 10 adults make zero cash purchases in a given week.

One of the lead causes in the steep decline in using cash is the convenience of using peer-to-peer payments, sometimes referred to as P2P. Once you sign up for a P2P service you can transfer money to pretty much anyone from your computer, tablet or smartphone.

P2P payments were popularized in the early 2000s by PayPal® as a way for people to pay for eBay® purchases without having to share their credit card information with total strangers. By the time smart phones came around, consumers soon discovered that they could reach for their phone instead of their wallet to transfer money between friends and family.

Fast forward to 2019 and the P2P market is bigger than ever. There are multiple P2P payment options to choose from, including some well-known names.

  • Apple Pay. Apple Pay comes pre-loaded on iPhones, but you have to link it up to your debit or credit card to make it work. It doesn’t work with non-iPhones and, like the others, you have to wait a few days to get money from the app to your bank account.
  • Facebook® Messenger. This app is for more than just chatting. You can add your debit card to Messenger and it can become a P2P money transfer system. Again, it may take a day or more to get money to your bank account. 
  • Google Pay®. Google Pay is most popular with people using Android phones and can be used to make purchases from a business as well as send money to friends. Transferring funds to your bank account could take up to three days.
  • Venmo. With Venmo, which is owned by Paypal, you may have to wait a day or two to get the money you receive deposited in your bank account. Also, if you pay with a credit card, there is a service charge fee. And you’ll have to decide for yourself if this is a plus or a minus: You can see where your friends spend with Venmo. Hopefully it’s not TMI.
  • Zelle. In 2018 Zelle far outpaced Venmo interms of payments processed, with Zelle processing payments of $119 billion compared to Venmo’s $62 billion, according to The Financial Brand. Zelle transactions typically occur in minutes when the recipient's email address or U.S. mobile number is already enrolled with Zelle. If your financial institution doesn’t offer Zelle yet, you can download the Zelle app and easily enroll using your email address, U.S. mobile number and a Visa® or Mastercard® debit card issued from a U.S.-based account.

Be Cautious When Sending Money Online and With Your Mobile Phone[cite::590::cite]

All is not rosy when it comes to the relatively new P2P payment territory, though. Fraudsters have found they can exploit people who are unfamiliar with these apps and scam them for money.

1. Know who you are sending money to. Remember: most P2P apps are meant to be used between people who know each other and not to buy stuff from strangers. Venmo, for example, has a no commercial use rule. You could sell something to a stranger who pays you with Venmo, only to have Venmo pull back the money if it suspects the no-commercial-use rule was broken.

2. Avoid using P2P payments to purchase a product or service that you have not already received. There may be no recourse.

3. Don’t disclose your personal information. You may get a scam call from someone pretending to be an employee of your bank or from your P2P provider’s customer care center or fraud department. The fraudster will try to talk you into sharing your login ID and password. That is a red flag. Your bank or P2P provider will never call you to request information it already has or ask to remote into your computer, unless you initiated the request for help with some banking issue. Always be careful when discussing financial details over the phone.

You always look both ways before you cross the street, just to be safe. The same caution goes with using P2P. As long as you take precautions, you can enjoy the great convenience of using P2P payments with your friends and family.

To learn more about Zelle, visit the Zions Bank website or talk to a banker at a Zions Bank branch near you. For a limited time, try Zelle and get a $5 eGift Card to one of 20 retailers[cite::8650::cite].

Don Milne is Financial Literacy manager for Zions Bank.

A division of Zions Bancorporation, N.A. Member FDIC. PayPal and Venmo are registered trademarks of PayPal, Inc. eBay is a registered trademark of eBay, Inc. Apple Pay is a registered trademark of Apple, Inc. Facebook is a registered trademark of Facebook, Inc. Google Pay is a registered trademark of Google LLC. Visa is a registered trademark of  Visa International Service Association. Mastercard is a registered trademark of Mastercard Incorporated.

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