Payment app safety tips

Do you use peer-to-peer payment apps? According to new research, the majority of Americans have sent money this way. 

With payment apps, it may be easier than ever to split the dinner bill with a friend, divvy up vacation expenses with family, or pay a roommate for your part of the utility bill.

Unfortunately, it can be just as easy to send money to a scammer — and here at Allstate Identity Protection, we’ve seen a rise in identity fraud cases involving payment apps. 

Read on to learn about the most common payment scams we’re seeing — plus tips to protect yourself against them. 

What are peer-to-peer payment apps? 

P2P transactions — also known as person-to-person payments — are online money transfers, enabled by a third-party app or site.

Payment apps or sites make it easy to send money with a few taps — and this convenience and speed have helped P2P platforms surge in popularity over the last few years.

According to the Pew Research Center, 76 percent of Americans say they have used at least one of these popular payment apps or sites: PayPal, Venmo, Zelle, or Cash App.

Know the risks 

That being said, it’s important to keep in mind that scams are increasing on these platforms, too.

Just ask Kelli Starks, Senior Restoration Specialist at Allstate Identity Protection. She’s helped our members manage this fraud type firsthand. 

One man recently called us after he accidentally revealed his personal information to scammers, who then used his details to break into an old PayPal account — one he hadn’t used in over a decade, she says.  

“From there, the fraudsters were able to access his bank account,” Starks adds.

In other cases, victims are tricked into transferring money directly to a scammer.

Sending money this way is like sending cash, which makes this fraud type particularly devastating. 

“If you’re scammed on a P2P app — or even if you accidentally send money to the wrong person — it can be difficult to get the money back,” says Starks. 

“Ultimately, the best way to protect yourself from payment scams is to know what you’re up against before it happens,” Starks says. “Some really simple actions can do a lot to keep you safe.”

Common P2P payment scams

If you know what scammers are up to, you’ll be more likely to identify and avoid fraud if it happens to you. Here’s what to watch out for:  

• Imposter scams: In many common scams — including grandparent scams and romance scams — fraudsters are now requesting that victims pay via a payment app, either instead of or in addition to a wire transfer or pre-loaded gift card.  

• Account takeover scams: In some cases, fraudsters use stolen personally identifiable information (PII) to hack into a P2P payment account and steal money. 

• Phishing scams: Think twice if you see an unexpected bill from a payment app. In one phishing scam, fraudsters send a phony invoice, then prompt you to call a number to dispute the charge. But when you call, instead of the payment app's customer service, you’re connected with a scammer — who then talks you into sharing information or access that can lead to identity theft and fraud. 

• Fake reimbursement scams: A scammer "accidentally" sends you money via a payment app — then requests you send it back. But the original payment was connected to a fraudulent account, and by the time the service provider catches the issue, the scammer has made off with the cash. 

How can I protect myself from payment app scams and fraud? 

Now that you know what you’re up against, the next step is to safeguard your accounts and always take care when sending money on payment apps. Here’s how:

1. Only send P2P payments to someone you know and trust. First, verify the contact information — such as the phone number or email address that’s associated with the account — to ensure you’re paying the right person. Then, send a test payment. “When I’m sending money to someone new, I like to send a small amount, like $1, to be sure I have the right account before sending a larger payment,” says Starks.

2. Don’t use a P2P app to shop online. If an online retailer is requesting payment through a payment app, consider it a red flag. “Credit cards are the safest way to purchase goods online,” recommends Starks.

3. Link your payment apps to a credit card rather than your bank account. Credit cards typically offer stronger consumer protection against money lost to fraud, even if they were linked to a peer-to-peer platform. 

4. Activate a personal identifying number (PIN) on all P2P payment apps and use strong passwords. This will make your account harder to hack, even if your phone falls into the wrong hands.

5. Close any unused P2P payment accounts. If you no longer use an account that is connected to your debit or credit card, be sure to close it. 

6. Don’t connect your P2P payment account to social media. Some social media platforms make it easy to connect your P2P payment accounts to pay for in-app purchases. However, if an identity thief gains access to your social media account, they might also be able to access your payment app account, and any associated bank accounts or credit cards. 

I’ve been scammed — now what? 

Any time you share your personal information, there's a risk that it could become exposed, which could then lead to fraud.

Fortunately, if you’re an Allstate Identity Protection member, our expert specialists are on call 24/7 to help guide you through what’s next.

Money lost to peer-to-peer payment scams is typically not covered by banks, payment apps, or your identity protection plan. 

However, that doesn’t mean that you have to face this type of scam alone — our team can help you report the fraud to the necessary parties.

And if you suspect that money has been stolen from your P2P app as part of a larger identity theft and fraud attack, we’re here for you — give us a call for further assistance.