How To Protect Yourself from Peer-to-Peer Payment Fraud?

Peer-to-peer (P2P) payment systems, including Zelle, Paypal, Apple Pay, and Venmo, simplify the ability for someone to exchange money directly with another person. These payments make the transfer simple, yet often, these transactions carry a high risk of fraud.

P2P payment processes have implemented several layers of protection, including encryption, multi factor authentication, and payment protection. Yet, even with these safeguards, the users are still subject to hackers and scammers targeting them.

Hackers attempting to commit fraud against P2P users will use several attack techniques, including account takeover. Users concerned that their online credentials may become compromised should subscribe to IDStrong.com dark web monitoring.

If someone gains unauthorized access to your credentials, IDStrong.com  will scan various internet portals, including the Dark Web, to determine if this has happened.

What is Peer-to-Peer Payment Fraud?

P2P payment fraud happens. Individuals using these services will become subject to several fraud attempts by hackers and scammers. These scams include:

Water, Power, and Gas Bill Scams

When people set up their utility accounts with the local power, water, and gas providers, they enable SMS text notifications when their bill is due. Hackers and scammers impersonate this notification process. Cybercriminals embed a link into rouge text, redirecting users to the fake site. Not wanting their utilities shut off, users click on the malicious link and use their P2P application to pay.

Third-Party Marketplace Scams

Users accessing Facebook or Instagram become inundated with ads from various product providers. These products offered by third-party companies include next-generation diabetic sugar testers and rubber folding chairs—these products initially, in many cases, were created by overseas shippers. When someone places an order, the shipping requires a full payment upfront. The user leverages any of the P2P applications to cover the cost of the product. For example, PayPal offers buyer protection if the shipping company fails to deliver the product.

This type of fraud continues to be very common, especially as social media marketplaces grow.

Ticketmaster Scams

Ticketing scams happen when buyers and sellers operate outside of Ticketmaster or StubHub. These sites have created several robust anti-fraud controls to help protect both buyers and sellers of tickets. However, some sellers and buyers will choose not to use these platforms to save on transaction fees.

That decision ultimately leads to ticket scams. Sellers will ask for a price without the actual product, and buyers have no protection other than possibly leveraging protection services through a P2P provider. However, because these transactions occurred on unprotected platforms, there is no guarantee that the buyer will get their money back.

Credit Card Payment Scams

Credit card payment scams look vaguely familiar to email phishing scams, which have become business email compromise attacks. These attacks lure finance departments, CEOs, and CFOs into paying fraudulent invoices. Scammers posing as credit card companies will send a payment reminder to the victim with an impostor payment link resembling a P2P with a tagline, " We accept Apple Pay and PayPal."

People who respond with a sense of urgency to pay their credit card bill don't realize this is a fraud attack.

Types of Peer-to-Peer Payment Fraud

P2P payment fraud happens through several attack vectors. Hackers and scammers will either focus on using one method or several in a kill chain. These attack vectors include:

Account Takeover

Account takeover happens when a hacker tricks the victim into disclosing their username and password to their financial, social media, or e-commerce sites. Hackers then log in as the victim and steal money and additional personal information or conduct fraudulent activities impersonating the victim.

Social Engineering Scams

Social engineering scams are like email phishing attempts to impersonate someone within somebody's social media channels. Hackers and scammers will troll through their victim's social channels, including Facebook, LinkedIn, and Instagram. They possess much information about their target's social activities, including videos, pictures, blog posts, and friends lists.

Hackers will attempt to impersonate someone within their victim's social circle. This impersonation is often urgent and a life-and-death issue requiring a large sum of money to be sent to them. They use trolled information from social media to build credibility with the victim before asking for funds. Often, they will close with, "I can use my Paypal or Zelle!"

How To Identify Peer-to-Peer Payment Fraud?

If you receive a payment request, wait a moment and read the message first. Do you recognize the source of the request? Do you have an account with the organization requesting payment? If this is a friend you know, do you have a habit of lending money?

Hackers and scammers will prey on older adults by pretending to be bill collectors demanding payment. They will also target college students by impersonating a student loan officer with a pre-approved loan. All these scams require the student to set up an account and provide the P2P payment information.

How To Avoid Peer-to-Peer Payment Fraud?

Preventing P2P fraud starts with everyone becoming more aware of the problem. Read every email and text message, and think before responding to hostile phone calls from people you do not know.

Here are some recommendations to help prevent P2P payment fraud.

Enable Security Features

Leverage any additional security protection features, such as multi-factor authentication, biometrics, or payment protection, provided by the P2P application.

Verify Recipients

Before you make a request, verify again who this party is. Are you conducting business with them? Make your check payment for business purposes. If this is a personal payment, only send money to people you know.

Be Wary of Scams

Scams include people who claim to know you or someone attempting to extort money from you. Make sure you block all these requests. It is better to be late on a payment and send money to the wrong party.

Keep Software Updated

Like other critical applications on your device, update the app and the operating system. 

Best Practices for Safe P2P Transactions

Protecting yourself, your money, and your contacts within your device should compel you to leverage these security tips:

Use strong, unique passwords.

Passwords should be complex yet simple enough for you to remember. If the app supports any form of biometric to save you from typing your password, you should leverage this.

Regularly monitor account activity.

Take a moment before every new transaction to review any previous transactions to ensure you executed those payments. If you see any transactions not executed by you, your account is most likely compromised, and you should immediately change your password and notify your credit card or bank.

Avoid sharing personal information over insecure channels.

Social media channels are still a great way to be social. Yet, when wanting to be social, it is recommended that you only share personal details, including your email address, cell phone number, address, or place of employment, if you feel you can trust the person.

What to Do if You Fall Victim to Peer-to-Peer Payment Fraud?

The first step is to change your password on the P2P application. After you have changed your password, file a complaint with the FBI's Internet Crimes Complaint Center. FBI correlates and investigates financial fraud, business email compromise, and P2P fraud events.

Preventing P2P fraud starts with staying alert, verifying each transaction before money is sent, and using all available cybersecurity-preventing tools, including biometrics, to help keep your voice safe.

If you suspect someone uses your login credentials for P2P applications, change your password immediately.

Another critical step is for users to subscribe to IDStrong.com's monitoring services. This service helps determine if credentials have become compromised and used on various financial, marketing places, and travel sites.

For information about IDStrong.com and its various offerings, click here to review pricing today!