ST. LOUIS — Cash is king, as the saying goes, but not many of us carry it around anymore.
Instead, peer-to-peer payment apps, such as PayPal, Venmo and Zelle, give the convenience of cash right on our phones. But what happens when something goes wrong — for example, a type of scam? Could your hard-earned money be at risk? Consumer Reports explains how to protect your P2P electronic payments.
The main risk in using a P2P app is that you have no recourse in getting your money back if you send money to a scammer, the wrong person or if you send the wrong amount because of a typo.
Last year alone, the Federal Trade Commission said there were more than 70,000 reports of fraud and $130 million in losses with mobile payment apps.
And the apps are under fire from consumer advocates demanding protection from fraud and user error. But until that happens, CR says one way to protect your payments using P2P apps is to link your credit card to the app and fund your payments through the credit card. When you do that, you could benefit from the same purchase protections that your credit card offers. But it might not be free. Many P2P apps charge about 3 percent when you use a credit card.
If you do choose to keep your P2P app linked to your bank account, CR offers this word of caution: If you are going to be using your P2P account for things like sending money to people you don't know, you really have to be very careful—because you have no way to get that money back if something goes wrong, and that could be very costly.
Consumer Reports contacted Cash App, PayPal, Venmo, and Zelle. All of them said keeping users informed and educated—and protecting them from fraud—are top priorities.
COMPANY STATEMENTS:
CASH APP
Preventing fraud is critically important to Cash App. We continue to invest in and bolster fraud-fighting resources by increasing staffing, educating our customers, and adopting new technology. We are constantly improving systems and controls to help prevent, detect, and report bad activity on the platform.
PAYPAL/VENMO
The security of PayPal and Venmo users and their account information is a top priority and we take all the necessary steps to protect our customers. We've always made preventing bad actors from using our platform a top company priority. We have a zero-tolerance policy for fraudulent activity, and our teams are working tirelessly to protect customers against anyone attempting to defraud well-intentioned individuals.
ZELLE
Zelle and its participating financial institutions monitor payment activity on the network 24/7 for suspicious activity and to help proactively protect consumers. If a consumer believes they have fallen victim to a scam, they are encouraged to contact their bank, credit union or Zelle immediately. We believe that the best protection is prevention and we offer educational resources on how to effectively use Zelle and how to spot potential fraudsters and scammers.
For more information on peer-to-peer transactions, check out these stories from Consumer Reports.