Peer-to-Peer (P2P) Payment Scams to Watch Out For

9th January 2024 | Advisory, Blog

Peer-to-peer Payment Scams on the Rise with Zelle and others.

Zelle payment scams are surging in this peer-to-peer payment service. These financial scams employ social engineering to deceive victims into voluntarily sending money to fraudsters. The problem is worsened because many users don’t realize they have Zelle access via their online banking, making them more susceptible to this fraud. In contrast to typical fraud involving unauthorized transactions, Zelle (and other P2P) scams trick victims into approving the payments themselves, often making reimbursement challenging or impossible.

Now that you know there is substantial fraud in P2P payment services, let’s explore some of the more common tactics fraudsters are using in these scams.

Common Social Engineering Scam Scenarios

One frequent tactic is impersonation, where scammers pose as family, friends, or officials, requesting urgent fund transfers. On platforms like Facebook Marketplace, overpayment scams are common, involving phony checks and Zelle refund requests. Romance scams, fraudulent invoices, lottery scams, and malware also frequently target victims’ Zelle accounts.

Additionally, some fraudsters masquerade as bank fraud department representatives, duping victims into transferring money supposedly to reverse a fraudulent transaction.

These are typical social engineering strategies employed by financial scammers. Next, lets examine some protective measures you can take to avoid these financial disasters.

How to Reduce the Risk of P2P Financial Scams

To mitigate these risks, it’s crucial to be vigilant. Combine common sense and skepticism with the following five (5) precautions to prevent becoming a victim yourself.

Upon receiving a call alleging fraud on your account, immediately disconnect and contact the organization using their official phone number.
Exercise caution when divulging personal information, particularly in response to unsolicited inquiries. Such details can significantly enhance the believability of scams.
Rigorously confirm the authenticity of requests for money transfers, focusing on those that are urgent or unexpected. Hackers want you to react quickly, without thinking the request through.
For transactions on Facebook Marketplace, Craigslist, or similar platforms, conduct exchanges and payments in person, preferably at a safe location like a local police or fire station, which usually offers the added security of camera surveillance.
Always have a companion accompany you during goods and services exchanges for added safety.

Users should be aware of the different types of scams and the tactics used by fraudsters to better protect themselves. In the meantime, your financial institution may be taking its own measures to reduce or eliminate these risks. Let’s examine these institutional measures next.

What are Financial Institutions Doing to Prevent These Scams?

Banks and financial institutions are working to address these scams with advanced risk modeling, Artificial Intelligence (AI), and machine-learning technologies. If a financial institution can spot the fraud and stop it before dollars change hands in online transactions, they might avoid some of these fraudulent payments. However, the challenge remains significant due to the nature of these scams, where the actual customer authorizes the payment, often under the fraudster’s guidance.

P2P Payment Scam Conclusions

While platforms like Zelle, PayPal, and Interac e-Transfer provide convenience, they also create opportunities for complex scams. Staying informed and cautious is essential to prevent falling prey to these tactics. Keep your hard-earned money by adhering to the outlined precautions, remain vigilant, and stay safe. It can be a dangerous world out there if you don’t know what to expect online today.