(3 Minute Read) – With Peer-to-Peer payments, it’s never been easier to send money, right from the palm of your hand. Apps like Venmo, Zelle, and Cash App allow you to send funds instantly to another person. It can be handy when you’re out to dinner and you want to split the bill, or if you want to pay your roommate your share of the rent.
Just like all money transfers, these peer-to-peer instant cash apps are not without risk. It’s important to remember that once you hit send, that money is gone. That’s not a problem when your money ends up where you want it to go—but it could be a problem if you send it to the wrong person, or even a fraudster.
“While these instant money transfer apps are incredibly convenient, they can be risky.”Fraud and Security Investigator at Unitus Community Credit Union
Of course, scammers are always looking for new ways to get your money. They have targeted some of these instant money transfer services to trick people into sending them money. In some transfer scams, the fraudster will tell you they “accidentally” sent you money through the app, and will ask you to send the money back to undo their “error.” In this scam, if you agree to send money to the fraudster, they will then recall the initial credit they sent, and you’re out the money you willingly handed over.
“The most important warning I can give someone is to never send money through these peer-to-peer apps to someone they do not know,” explains Holsten.
Other Peer-to-Peer Scams To Be Aware Of
Other scams are even trickier. For example, say you want to buy concert tickets on a resale site. A scammer will ask you to pay them through one of these apps and then never send the tickets or they’ll send fake ones. Unfortunately, you’re out that money because you authorized the payment to the scammer. These apps do not offer the same kind of purchase protection as your debit or credit card do.
“It can be difficult to know that the person on the other end of the transaction is a scammer,” said Holsten. “It’s safest to do business with people you know and to make purchases through reputable websites. That said, these cash apps can be safe and convenient when you’re dealing with someone you know and trust.”
Set Up Security Features
Many instant peer-to-peer transfer apps have security features built in. Consider using two-factor authentication or other identification tools within the app to ensure you’re sending money to the right person. In some apps, the recipient can provide you with the last four digits of their phone number so you know your money is going where it’s supposed to.
“Additional security options within these payment apps are designed to protect you,” explained Holsten. “Take advantage of those protections and only deal with people you trust. Do not send money to someone you do not know.”