Tackling P2P payment fraud

Contactless ways of doing daily transactions have increased due to the current global pandemic. Online consumers are using more digital methods as ways of paying for goods and services.

Cards and exchanging cash have become more problematic, so online shoppers and consumers have turned to various payment applications to buy remotely.

P2P payment apps have sprung up, allowing consumers to quickly and digitally transfer funds to businesses and friends.

However, these P2P transactions must have a high-security level, as cybercriminals targeted them to intercept financial payments. During the pandemic, these attacks have sadly increased as more of us are paying online for goods.

What are peer-to-peer payments?

Peer-to-peer payments, also known as person to person, are used to pay, for example, rent to a landlord or to split a dinner bill between friends.

Payment apps allow two people to transfer funds between each other using their bank accounts or credit cards through a mobile app.

These apps’ intended purpose is to make a payment to friends, not strangers or those you do not know.

Suppose you approve the transactions, and by authorised, we mean to press the button allowing the transaction to go through. In that case, you will likely not receive your money back if it is a fraudulent transaction.

Most P2P app (providers) protect themselves by their terms and conditions. They typically specify that the customer bears the risk of loss if the payment is authorised.

Increase in peer-to-peer payments

Peer-to-peer payments are instant and secure digital transfers that make it straightforward to send money to friends, family, trusted businesses and professionals.

Secure digital transfers aim to make financial transactions without using a card or a traditional wire transfer process.

Much like a debit card, they remove the requirement to have cash on yourself by making a payment linked from your bank account — only without the card itself.

Peer-to-peer payments also expand to non-banking accounts, like money transfer accounts or other types of P2P accounts.

It’s a fast and secure way to send money and digitise day-to-day transactions. Unfortunately, if you’re unprepared, this added speed and convenience can open an opportunity for fraudsters.

What is P2P payment fraud?

P2P payment fraud has no explicit definition, yet it involves being scammed or defrauded from your funds for financial profit.

Faster P2P payments attracted fraudsters equipped with creative ways to steal money via the P2P application into their accounts. Then they use the funds to pay for goods and sell later for profit.

Many users report being scammed by cybercriminals who have opened fake P2P accounts and use them to defraud unsuspecting victims.

Bogus sellers offer goods like a music concert or sports event tickets and ask the buyer to pay with a P2P service. Once the buyer pays, funds are withdrawn from their bank account that links to the P2P app, and the seller disappears.

Sadly, there are more sophisticated fraudsters out there.

They use a combination of malware, social engineering, remote access, SIM swapping, call forwarding or several other techniques. They expand their targets to include those depositing into P2P platforms with complex P2P scams.

Tips for avoiding P2P payment fraud

Sadly, protecting yourself against fraudsters and scam artists is not 100% successful, but there are tips to minimise that risk.

Remember that fraud scams and hacks are becoming more innovative in their ways to defraud people, and even the most alert amongst us are successfully targeted.

Still, use the below as a good start to protecting you from peer-to-peer payment fraud.

• Use the app only to pay friends, not strangers. Sending money to people you do not know could result in fraud.
• Several app providers do not permit you to send money for business purposes, for instance, buying products and services. Even if the seller is reputable, and this is not a case of fraud, money can be lost because the payment app provider prohibits specific types of transactions. Ensure you read all the terms and conditions before using the apps.
• Review every transaction before you send it, and then double-check the recipients’ details. Again, this is not an example of fraud but a good practice to ensure you don’t lose any payments.
• Suppose the person asks for an extortionately high amount as a pre-payment for a product or service. Whilst this may seem logical in many purchases and reducing your risk by 50%, it still is high enough for you to be defrauded out of your own money.
• Never buy a product or service from anyone who says you must pay by a specific date, or you’ll miss out. Using FOMO (Fear Of Missing Out) is a sure way to get you to act now.
• App providers update their apps to resist new security risks and hacks. Continually update your payment apps when required. Scammers can hack your account faster on older versions of apps if they are not updated.
• Always opt-In for more robust security if the app allows it, like adding a PIN or using two-factor authentication.
• Before making larger purchases, always call the P2P provider and ask what you can do if a suspicious transaction occurs and how you may be covered.
• Suppose the payment app company is notoriously bad in their customer support and answering you. Even for the most simple questions, best to avoid that app.
• Check customer feedback and reviews of P2P payment apps. Determine whether they have aided their defrauded customers well previously or whether scam artists frequently target a specific app (PayPal, for example).

What to do if you suspect P2P payment fraud

If you feel you have been scammed and are a victim of payment fraud, immediately contact your local police.

When you file a police report, it demonstrates to your P2P app provider that you’re serious about getting your funds back. The company will also understand that the transaction is fraudulent.

The company will understand that if you are a target, then another customer is also being targeted.

Many of our customers recognise that peer-to-peer payments remove friction from making secure and fast payments, including investing in alternative investments like P2P loans, easy and painless.

Empowering consumers to enjoy the advantages of doing so also requires app providers to ensure that security is top-notch.

Monestro is on a mission to make the P2P space better for all, even if we do not enable P2P payments per se.

Our own team believes the right fraud-fighting approaches can help P2P customers keep transactions moving quickly whilst minimising their exposure to fraud.

Originally published at https://monestro.com.