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Peer-to-peer payments scams

What do people who love puppies, Mario Kart 8, and delivery services have in common?

All are potential targets of a rising scam utilizing P2P (peer-to-peer or person-to-person) payment services like Venmo, PayPal, Apple Cash, and Facebook Pay. This is a con that has particularly enjoyed preying on COVID-19 fears.

“Since the start of this pandemic, we’ve definitely seen a rise in P2P scams,” said Fabiola Garduno, card services lead for Numerica Credit Union. “We’ve always had these types of disputes, but we’re definitely seeing an increase.”

To make matters worse, it is extremely difficult to recover funds once a payment has been sent — it’s like giving someone cash.

There are numerous coronavirus scams out there to avoid. Here’s what you need to know to keep from falling victim to this one.

How P2P scams typically play out

Say you’re looking for a concert ticket, video game, or someone to run errands for you. You spot a deal online — like a Tri-Cities Facebook group or Spokane Craigslist — and the seller asks you to submit your payment via a P2P platform.

Whether you have that platform or not, the seller explains it’s a convenient way to transfer funds from your bank account or credit card to their account using your Internet or phone. If you don’t have the platform, the seller may direct you to the P2P app (others not yet mentioned include Google Pay, Zelle, and Cash App). You set everything up, enter the transaction amount and seller’s username or number, and press send.

And that’s when the seller disappears. The money is collected, and the good or service turns out to be a hoax.

Lately, that never-delivered item is none other than man’s best friend.

“The puppy trend is happening right now,” Garduno said. “People are confined to their homes and looking for a companion, and they trust the source is legitimate only to find out they’re giving money away without getting a puppy in return.”

Why you could be a target of a P2P scam

A 2020 AARP survey found that while usage is most common among tech-savvy young adults, more than 70% of Americans use P2P payment services, including 57% of those over 50 years old.

Anyone who shops online want ads is a potential target. Experts caution you are more vulnerable to a scam when you are the one searching out the good or service.

“It’s easier for our members to fall victim because usually the service or good being offered is something that the fraudster knows will catch the eye of the general public,” Garduno warned. “The deal is too good to be true, and it is usually presented as act now or lose out. The fraudster then pushes the cardholder to pay via P2P only, which is essentially like paying the fraudster with cash. Once the money is transferred, it is gone.”

So the next time you are browsing for a deal on an item such as an iPhone, Xbox, or video game or looking for someone to deliver groceries, meals, or run errands for you, be warned. If the seller asks you to pay with a P2P service, it’s often a scam. Unless you have already received the item or service and are sure of the seller’s legitimacy, don’t send a P2P payment.

Can you get your money back in a P2P scam?

That’s truly the (fill-in-the-blank)-dollar question. And the answer is usually no.

Scammers love P2P because any dispute you initiate goes to the P2P service and not to the fraudulent seller, making it difficult to challenge the scam itself.

“The point of the transaction from the perspective (of the P2P payment service) was to move funds, and they did what they were supposed to do,” Garduno said.

That’s not to say the fraudster shouldn’t be held responsible; it simply means P2P transactions leave the buyer less protected.

If you do fall victim to a P2P scam associated with your Numerica account or credit card, reach out to us immediately at 800.433.1837 or stop by a branch to file a dispute.

“Our goal is always to try to recover the money in any way we can,” Garduno said. “Unfortunately, there are situations where our hands are tied depending on what rules and regulations are in place.”

Victims are also encouraged to file a complaint with organizations intent on protecting consumers and prosecuting scammers for their crimes. The Washington and Idaho Office of the Attorney General, Federal Trade Commission, and Better Business Bureau all have links to file a complaint on their website home pages.

Four tips for P2P success

1.Triple-check recipients

With P2P, a simple mistake can cost you. Since P2P is the equivalent of giving someone cash, it is extremely important you only send money to someone you know. If you send money to the wrong person, that money is gone and you cannot get it back.

2. Avoid red-flag sellers

Typically, a fraudulent seller will use terms like “act now or you will miss out” or may otherwise come off as pushy. They may also be insistent on payment through P2P and resistant to other transaction methods. If you feel hurried or get a sense the offer could be too good to be true, those are major red flags. Before you send the money, look out for any last-minute changes in the goods or services you are paying for. Fraudsters are known for add-ons such as purchasing insurance for a high-value transaction in order to maximize their return per scam victim.

3. Set up added securities

P2P platforms typically allow a user to create a PIN or a similar protection that is required when opening the app or transferring money. This extra layer of security protects you if someone else gets ahold of your phone.

4. Send to people you know

P2P systems aren’t intended for online purchases or other stranger transactions. They are designed to be used among friends and known associates, such as helping to cover a restaurant tab or paying a trusted babysitter or hairstylist.

P2P for the win!

Remember, the presence of scammers shouldn’t keep you from using the latest technologies. In fact, we’ve been offering M2M at Numerica for a while now — free member-to-member transfers.

The key is to stay informed, follow best practices, and by all means trust your instincts when something doesn’t feel right. When used properly, P2P can be an excellent option for 21st century transactions.

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