BBB tips on avoiding scams and using peer to peer payment apps safely

Warmer weather means summer trips, patio season, farmer’s markets and more: In short, lots of reasons to send money between friends, neighbors or small businesses. Peer-to-peer (P2P) payment apps like Venmo, PayPal, Zelle or CashApp are a convenient way to split checks, pay rent or purchase from vendors.

Unfortunately, scammers are finding creative ways to steal money from P2P app users. Unlike more traditional banking services, P2P apps are less likely to provide reimbursement for fraud – making the risk higher for consumers.

There are a few ways scammers take advantage of P2P apps:

• Impostors may use stolen photos or logos to create an account that appears to be one of your friends or a legitimate business, then request a payment from you.

• Fraudsters may send payment with a stolen or illegitimate credit card or, since payments on some apps take a few days to process, they may cancel a payment after receiving a purchased item.

• A scammer may claim to be selling an item that doesn’t exist on a social media or marketplace website, and ask for payment up front via P2P app.

• Scammers may run “overpayment” schemes, where they use spoofed messages or stolen credit cards to convince victims that they were accidentally paid more than owed. Well-meaning consumers will lose money by “returning” the payment to the scammer.

A good rule of thumb is to treat P2P apps like cash: Be careful about where you send money and be aware that transfers are often irreversible.

How can I avoid payment app scams?

• Send money to people you know and trust. It’s best to use these apps with people you know in real life or whose identity you can verify with some source other than the payment app.

• Treat it like cash. Remember that P2P payments are instant and often irreversible. Don’t spend it unless you’re sure about it!

• Link to a credit card. While it can be difficult to get your money back from a scammer, linking your payment app account to a credit card may give you more protection.

• Check your linked account after making or receiving a payment. Make sure the payment was processed for the correct amount by checking your linked credit card or bank account after you pay. Remember that app payments can take a few days to process.

• Use extra security on your account and devices. Use the settings menu in your phone and in the payment app to turn on extra protection, such as multi-factor authentication, requiring a PIN, or using fingerprint or facial recognition like Touch ID and Face ID.

• Avoid storing large balances. P2P apps offer limited fraud protection compared to traditional banks, and money sitting in your account is generally not covered by FDIC insurance (government insurance that makes sure you don’t lose your money if a bank’s business fails). It’s best to promptly transfer large balances to an insured account like a bank, credit union or card. Some apps offer FDIC insurance coverage in specific circumstances, like if you sign up for direct deposit or use the app’s own credit card – but each app has different rules, so consider them carefully.

• Check the recipient’s username and photo before you send money. If you get an unusual request (for a lot of money, for an odd reason, etc.), contact the sender via another method to make sure it’s legitimate.

• When in doubt, pay another way. If something feels off, use another method or reconsider the purchase. It’s common for small businesses to use P2P apps – but if a seller says they can only accept P2P apps, it could be cause for concern, especially when combined with other red flags.