P2P payment scams | blog.firstffcu.com

Zelle® is a fast, safe and easy way to send and receive money with people you trust, like your babysitter, your fellow PTA mom, your son’s soccer coach, or your co-worker. Whether you just enrolled with Zelle® or have been an active user for a while, there are a few tips you should always keep in mind to ensure you are being safe when sending money.

Only send money to people you know and trust.

Money moves fast with Zelle®, directly from your checking account to the recipient’s checking account – within minutes.* So, it’s important you know and trust the people you’re sending money to.

Why? Because you can’t cancel a payment once it’s been sent, if the recipient is already enrolled with Zelle®. And if you send money to someone you don’t know for a product or service you might not receive (like paying for something in advance), you may not get your money back. Keep in mind that sending money with Zelle® is similar to handing someone cash.

Beware of payment scams.

One example of a payment scam is buying event tickets at a price that seems too good to be true – from a stranger, and never receiving them. If the seller asks you to use Zelle® to purchase the tickets, you should refuse unless the seller is a person you personally know.

Also, keep in mind that no one from First Financial will ever ask you to send them money with Zelle® as a test, or to send money to avoid a fraud event.

Neither First Financial nor Zelle® offers a protection program for authorized payments made with Zelle®. So, if you aren’t sure you will get what you paid for, you should instead use another payment method with purchase protection, such as a credit card.

Treat Zelle® like cash.

Did your friend change phone numbers recently? It’s easy for people to change their phone number or email address. When in doubt, contact your friend to verify the email or U.S. mobile number they used to enroll with Zelle® before you hit “Send.” Another good check point for ensuring you’re paying the right person, is to confirm the first name that is displayed for Zelle® enrolled emails and U.S. mobile numbers.

If a person has already enrolled a U.S. mobile number or email address with Zelle®, you can’t cancel the transaction – so it’s important you get it right the first time.

If you’d like more information on safely using person-to-person (P2P) payments, check out these articles from the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB).

Helpful Tips for Using Mobile Payments Services and Avoiding Risky Mistakes

Tips on Using Peer-to-Peer Payment Systems and Apps

How to Keep Your Personal Information Secure Online

Some final reminders:

Always use caution when sending or receiving money from someone you don’t know. Scammers can trick people into sending money through a person-to-person payment app without upholding their end of the deal. And once the money leaves your account and is transferred to the scammer, there is little you can do to get it back.
Double check before pressing send. Be sure you are sending your payment to the correct person by double checking their user name, phone number, or email address before you hit the send payment button.
Setup your P2P payment app to require a password before making a payment. Setting up a password, PIN, or fingerprint before making a payment with a person-to-person payment app is a great way to ensure authentication first. This also prevents a fraudster from gaining easy access to your mobile phone payment methods and making payments from your account.
Contact your financial institution right away if you suspect any errors. If you notice any fraudulent transactions within your P2P payment app, contact your bank or credit union right away to report it.

*U.S. checking or savings account required to use Zelle®. Transactions between enrolled users typically occur in minutes.

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

Person-to-person (P2P) payment options have certainly made paying back borrowed money to friends and family very convenient. From going out to eat and splitting the tab, to chipping in for a gift, or paying a trusted contact for a service – P2P payment services have made our lives quick and easy. However, if you are a user of a P2P payment service such as Zelle, Square Cash, PayPal, Venmo, Facebook Payments, Google Wallet, Apple Pay, Payzur, and the like – buyer beware.

Continue reading to ensure you know how to spot a P2P payment scam so that you don’t fall victim to this type of fraud. P2P scams are extremely serious, because the victim unfortunately usually is not protected from money lost and fraudulent access to their account(s).

Why are victims of P2P scams usually not protected?

Due to the fact that P2P transactions are consumer initiated, there is not much protection when a fraudulent transaction occurs – because technically the consumer authorized the transaction. Whether it’s the actual consumer or a fraudster who initiated the payment service transfer, there really is no way to prove it. In addition, user error is often not covered either. Most P2P apps have user agreements prior to first time use, where the user agrees when money is sent through the app – any losses are on the user, since they authorized a transaction.

Recently, Zelle’s P2P service added a measure to help prevent users from sending money to the wrong person. Zelle now includes a pop-up warning if a user is trying to send money to someone who is not in their contacts, which makes them think twice before allowing the funds to leave their account.

How does a P2P scam work?

A P2P scam is basically an account takeover scam. Fraudsters will send text messages to an unsuspecting consumer, appearing as if the message is coming from the individual’s financial institution.

The text will usually appear to come from the individual’s financial institution (aka: spoofing) and will warn them of suspicious debit card activity.
For those who respond to this fraudulent text, the fraudster will call that consumer also spoofing the financial institution’s phone number – and claim they are from the bank’s fraud department and would like to verify a suspicious transaction.
The fraudster will then try to get the unsuspecting consumer to verify their identity, and let them know a passcode will be sent via text message – and that the consumer must provide the passcode over the phone.
Once the fraudster has that passcode, they’ll attempt a transaction that triggers another two-step authentication passcode (such as forgot password so they can reset the consumer’s password, or they’ll try to initiate a P2P transaction).
The fraudster now has access to all of the consumer’s accounts within Online Banking, as well as access to their P2P payment service if one is provided through the bank (such as Zelle) – and will begin using P2P payments to transfer money to themselves.

And unfortunately, there is not much that can be done once this happens – because it appears that the consumer approved the P2P transfer. Since the fraudster spoofed the financial institution phone number, they more than likely won’t be caught either – once it’s recognized that a scam occurred.

How can I make sure I don’t become a P2P scam victim?

Only send money to people you actually know. P2P transactions are instantaneous (meaning they happen within seconds) and are often irreversible.
Get all of your recipient’s details prior to initiating a P2P payment. Before you press “send” or “pay,” be sure you have the correct user name, phone number, photo, or other identifier. If you incorrectly enter a recipient’s email or phone number, the money could go to the wrong person and you may not get it back. Some P2P services offer the option of receiving a special code to confirm that the person you’re sending money to is your intended recipient. If this feature is available – use it.
Confirm you know how to get help if something goes wrong. Before using a P2P service, search the app for procedures and customer service contacts. Know who to reach out to if you have a problem.
Keep your app updated. Hackers usually look to exploit vulnerabilities. If your software is not up to date, you’re missing out on protections. Be sure automatic updates are turned on so you know you’re covered.

While P2P services are a useful and convenient way to pay those you know without having to go to the ATM or get change – it’s important to also be aware of the risks and ways to avoid fraud while using them.

Always remember that your legitimate financial institution will never ask you for your login credentials, passcodes, or user name. If you have additional questions or concerns about P2P payment services or have been a victim of a P2P scam in relation to a First Financial account, please give us a call at 732.312.1500 or email us at info@firstffcu.com.

Article Sources:

CUNA Mutual Group 2019 Peer-to-Peer Payments Risk Overview

CUNA Mutual Group Risk Alert – Sophisticated Scams Lead to P2P Fraud (May 12, 2020)