Peer-to-peer payment apps like Venmo, PayPal, Cash App, and Zelle can make it easier to pay for things and send money to friends. But scammers are also active on these platforms. With payment scams on the rise, protect your accounts and keep your money safe.
It's never been easier to split the dinner bill, divvy up vacation expenses, or pay your dog walker thanks to apps like Venmo, Zelle, and Cash App. According to new research, the majority of Americans send money using payment apps.
Peer-to-peer transactions are online money transfers enabled by a third-party app or site. You can send money on these apps and sites with a few taps.
Unfortunately, it can be just as easy to send money to a scammer.
Learn about the most common payment app scams — plus tips to protect yourself against them.
How scams on payment apps happen
According to a 2022 Senate report, data received from four banks totaled 192,878 cases of Zelle scams worth collectively $213.8 million in 2021 and the first half of 2022. Government leaders have also expressed concerns about Venmo scams and Cash App scams.
Our own Kelli Starks, Senior Restoration Specialist at Allstate Identity Protection has helped our members manage payment app fraud firsthand.
According to Starks, one member called 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. “From there, the fraudsters were able to access his bank account,” Starks says.
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 payment app scams
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, rather than by wire transfer or gift card. When someone reaches out unexpectedly and pressures you to send payment via a payment app, it’s safe to assume it’s a scam.
Account takeover scams: In some cases, scammers use stolen personally identifiable information (PII) to hack into a payment account and steal money. If you can't access an account using your legitimate credentials or money suddenly disappears from your account, a scammer may be to blame.
Phishing messages: In one phishing scam, payment app users are sent a phony invoice and are then prompted to call a number to dispute the charge. But instead of the payment app's customer service, they’re connected with a scammer who then talks you into sharing information or access that can lead to identity theft and fraud. Always think twice if you see an unexpected bill from a payment app.
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.
Avoid sending money to a scammer through a payment app
Safeguard your accounts and take care when sending money on payment apps by:
Only send 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.
Avoid using a payment app to shop online. If an online retailer only accepts payment through an app, consider it a red flag. “Credit cards are the safest way to purchase goods online,” recommends Starks.
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.
Activate a personal identifying number (PIN) on all payment apps and use strong passwords. This will make your account harder to hack, even if your phone falls into the wrong hands.
Close any unused payment accounts. If you no longer use an account that is connected to your debit or credit card, be sure to close it.
Don’t connect your payment app account to social media. Some social media platforms make it easy to connect your 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.
What to do if you’ve been scammed through a payment app
Any time you share your personal information, there's a risk that it could become exposed.
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 payment app scams is typically not covered by banks, the apps themselves, 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 payment app as part of a larger identity theft and fraud attack, we’re here for you — just give us a call.
