March 29, 2023 Security

Person-to-Person Payment Scams

Person-to-Person (P2P) payment platforms, like Zelle, Venmo, and PayPal, have made life much easier for many consumers.

Paying your friend back for the $20 you borrowed while at the mall, splitting a meal, and purchasing a shared gift is now as easy as a few quick screen swipes.

Unfortunately, though, P2P scams are rampant and varied. Also, once money is transferred through a P2P service, it’s usually gone for good.

Here are six P2P scams to beware of:

Mystery Money

In this P2P scam, a stranger “accidentally” sends the target money and then reaches out to them, asking for their money back. The target will see these funds in their P2P account and willingly return them.

Unfortunately, though, because this money was added to the target’s account using a stolen credit card or checking account, the platform will ultimately flag the transaction as fraud and remove the funds.

If the victim has already forwarded the funds to the scammer, the platform will hold them accountable for the funds and potentially block their account.

Hidden Credit Card Fraud

In this P2P scam, a fraudster will purchase an item listed on Craigslist or a similar site using a P2P service. They’ll pick up the item or have it shipped to their home, and they’ll never be heard from again.

Meanwhile, the P2P platform will eventually recognize that the funds for the purchase were fraudulently sourced. The payment service will take the money back from the seller.

The victim will be left without the item – and have no money to show for it.

Fake Customer Representative

Customer rep scams are an old story, but their appearance in the P2P world is only as old as these payment platforms.

In this scam, a target experiencing difficulty with a transaction on a P2P platform inquires about assistance on social media. A scammer sees that inquiry and then reaches out to the target, claiming to represent the platform and offering assistance.

If the target falls for the ploy, they’ll be directed to a bogus support site where they’ll be asked to enter their account details or credit card info. This, of course, leaves them open to identity theft and financial loss.

Utility Scams

Utility scams pulled off via P2P platforms follow the same script as the classic scam in which an alleged rep from a utility company reaches out to a target, claiming their service will be shut off unless a payment is immediately made.

In this variation, the scammer insists on payment via a P2P service.

Unfortunately, once the payment is made to this “service rep,” it can be impossible to reclaim the funds.

Password Scam

In this P2P scam, an alleged credit union representative or bank representative will reach out to a target via text, asking if they approve a recent large P2P transfer from their account. The target will respond with a quick “no.”

Next, the scammer will call the victim, again posing as a rep of their financial institution, and offer to assist them in reclaiming the allegedly frauded money. The scammer claims the victim must share their payment platform login credentials.

Unfortunately, if the victim shares the one-time passcode, the scammer will have the info to change the password and access the victim’s payment platform account. The scammer can now send money through the victim’s account.

Bogus Receipts

In this variety of a P2P scam, a scammer will insert themselves into a legitimate P2P transaction. They can digitally manipulate a screenshot to make it appear you owe them money.

In truth, though, the transaction was never completed, and if you send the money, you’ll send it directly to a scammer’s P2P account.

Stay Safe

Follow these rules when using P2P platforms:

  • Only send and accept funds from people you personally know and trust.
  • Always confirm that you’re interacting with the correct person by verifying their phone number at every stage of the P2P transaction process.
  • Call the P2P platform’s customer service number directly to resolve errors. Similarly, contact WeStreet Credit Union directly if you receive notification of an allegedly frauded account.
  • After completing a P2P transaction, check your checking account to confirm you’ve received the promised funds.
  • Stay up to date on common scams to protect yourself

P2P services are enormously convenient, but each transaction carries the risk of fraud. Use the tips outlined here to stay safe from P2P scams.

This article is for educational purposes only. WeStreet Credit Union makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.