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P2P Payment Pitfalls: How to Avoid Payment App Scams

More than half of all Americans use P2P apps, but are they safe? Here’s how to spot some of the top payment app scams and avoid becoming a victim.

Image of a phone with various apps open including PayPal, Venmo, Zelle, Cash App and Google Pay

Every year, more of us are completing our financial tasks online. From online banking to shopping and sending money to friends, over half of Americans use person-to-person (or P2P) apps.
But what are these payment apps, and are they safe? Here’s how you can spot some of the top online scams and avoid becoming a victim of cybersecurity fraud.

What are P2P Payment Apps?

Person-to-person apps allow you to send money directly to other people. Popular money transfer apps like PayPal, Venmo, Zelle, Google Pay, and CashApp are all examples of P2P payment apps that can be used with a mobile device to transfer money.

All that’s needed to complete a P2P payment is the recipient’s phone number, email address, or if they’re also in the app itself, their username. The sender will need a funding source (usually their bank account or card) connected to the app. 

The recipient won’t be able to see any of this information, so P2P payments can be a good way to send money while keeping your details private.

Many banks now provide P2P services to their customers, enabling them to send and receive money with others . At First National Bank and Trust, you can send money easily to another FNBT person directly from your banking app.

Are P2P Apps Safe?

You’re probably asking yourself, “Is PayPal trustworthy? Is Zelle safe?” Generally speaking, yes, they are. Many P2P apps encrypt your information to protect your personal data when sending or receiving money. However, since these apps often connect to your bank account, users may be targeted by scammers looking to commit cyber fraud.

It’s always a good idea to be cautious of possible scams, especially when using P2P services. Banking P2P apps are typically safer, P2P transfers can be sent to an account holder at any bank including FNBT. 

When using external P2P apps, like PayPal or Venmo, it’s best to connect these to a credit card if possible. This provides an added layer of protection between your money and anyone you send cash to. If you need to connect to your bank account, consider creating a separate account with a smaller balance specifically for this purpose.

Common P2P App Scams

Cybercriminals are always becoming more sophisticated with their scams in an attempt to access your money. Most PayPal scams, or those on other apps, come in the form of phishing attempts through text or email.

1. Fake texts from your bank

Receiving a fake text from your supposed bank is one of the biggest phishing scams in the world. Scammers will often reach out and pretend to be your bank, asking for confirmation of a transaction to trick you into disclosing your banking information.

The easiest way to avoid this type of scam is to not click on links in emails or texts that might be from your bank. Instead, go directly to the source and contact the bank yourself. Remember that your bank will never ask for personal information via email or text.

Call a bank number you’re familiar with, like your local branch, or use the toll-free number on your bank’s website to check if the email or text was genuine. Online searches for contact numbers often lead to fake websites.

2. Paying yourself

Some scammers won’t just stop at texts or emails and will instead call you directly and pretend to be from your bank. They’ll usually tell you that your account has been compromised, a fraudulent transaction was made, and that you must transfer money back to yourself.

This is one of the most prominent types of CashApp or Zelle scams, as criminals will ask you for access to your P2P apps and reverse an unauthorized transaction. They’ll then give you a code to enter, then type your first and last name along with “reversal” in the memo. Although this looks like you’re paying yourself, you’re actually giving the scammer your money.

If you ever receive a suspicious call like this, hang up and call your local bank immediately. Your bank will never ask you to do this kind of action, so it’s almost always a scam.

3. Accidental transfers

Similarly, scammers may say that a transfer has been accidentally made to your account and the money needs to be transferred back. Never send money back; instead, contact your P2P app directly about the error.

Criminals using this type of scam often work with stolen money, and P2P service providers can flag this. Never accept deposits or requests from strangers, especially on apps such as Venmo, where funds can only be requested via a username.

Common Payment App Scams: 1. Fake texts from your bank  Fake text that appears to come from your bank. Scammer tries to trick you into providing your banking information.    2. Paying yourself  Scammer tricks you into thinking you're reversing an unauthorized transaction, but instead of paying yourself, you're sending money to the scammer.     3. Accidental transfers   Fraudsters claim money has been accidentally transferred to your account and ask you to transfer it back.     4. Fake friends  Scammer imitates one of your friends and asks you to transfer money to them.     5. Overpayment scams  Someone buys something from you, overpays and asks the money be refunded to a different account.     6. Fake fraud alerts  You receive a fake fraud alert claiming your account has been frozen and you must take immediate action.    7. Winner scams  You've won a contest, but need to provide personal information to claim your prize.    8. Password reset emails  You get a text or email claiming someone has changed your password and you need to click a link to reset.

4. Fake friends

You may receive a friend request from what you think is someone you know personally, especially if the scammer has stolen a photo of them and is using that as their profile picture. You’ll likely get an unexpected, often urgent, funding request from these types of accounts.

Always look at the username carefully—usually there is something wrong, like a misspelling or a space where there shouldn’t be. Reach out to your friends directly to check if it was really them.

5. Overpayment scams

A P2P scam that small businesses should be aware of are overpayment scams. This is where someone buys something from you but overpays and then asks for a refund. They’re often completed using stolen cards or accounts, and the scammer will ask you to transfer the overpayment to a different account.

If this happens, you should ask the individual to cancel their payment instead of issuing a refund. If you need to issue a refund, always do so to the same account associated with the transaction.

6. Fake fraud alerts

Scammers will play on wide-scale fears of fraud and create fraud alert texts to panic you into taking swift action. This is especially true when they say your account will be frozen until action is taken.

If you receive a fraud alert, always go directly to your banking login and sign in from there. Never click a link or sign in from a P2P app to check this kind of alert.

7. Winner scams

Some scammers will set up notifications to inform you that you’ve won a prize and have money you can claim. This is most popular in apps like CashApp with Super CashApp Friday and other similar giveaways.

Cybercriminals have mirrored genuine contests and giveaways to encourage users to click on banners and alerts and hand over their information. 

8. Password reset emails

Texts or emails from an app may claim that someone has changed your password and ask you to log in at a secure link. Always look at the link address before clicking it, along with who the sender is. Like banking apps, always go to the app directly to change your password.

How to Avoid Payment App Scams

As a reminder, it’s always best to never click on suspicious links, notifications, or texts if you receive them. Instead, log into your apps or contact the service provider directly. Always look for typos in emails or texts—this is your biggest clue that something is a scam.

Most scammers will use a sense of urgency or create panic to make you act without thinking first. Don’t ever give money to receive money, and always inspect who the sender is. Always keep transactions within the P2P app itself rather than moving to another type of account or transaction elsewhere.

If you’re using a banking P2P service like FNBT’s Pay a Person, this should be your first choice before working through an external P2P service provider.

What to Do If You’re a Victim of a P2P Scam

If you find yourself a victim of cyber fraud, contact the P2P app platform as soon as possible. You should notify your bank immediately, especially if money has already been taken from your account. You can also file a complaint with the FBI to have your case looked into and possibly prevent the same criminals from acting again.

Fight Fraud with FNBT

Stay alert and informed with FNBT’s fraud prevention center. 

There, you can learn everything you need to know about how to protect your identity online, why and how to keep your sensitive information secure and learn more about identity theft protection measures you can take today.