How to Recognize a Peer-to-Peer (P2P) Payment Scam

If you need to send money to a friend or a family member, it's likely you will use a peer-to-peer payment app such as Venmo, PayPal or Cash App to do it. These apps have become quite popular, and their rise has given birth to a whole new generation of financial scams.

Here at Addition Financial, we know many of our members use P2P payment apps in their daily lives. These money management solutions are widely used, and we want to make sure that everybody knows about payment scams and frauds, so they can avoid falling victim to one. Here is the information you need to recognize a peer-to-peer payment scam.

How do mobile payment apps work?

According to Consumer Reports, 64% of all Americans and 81% of young adults between the ages of 18 and 29 use peer-to-peer payment apps. These apps function as a method to send money instantaneously to friends and family members—they may also be used to pay for consumer goods and services.

Some of the most popular P2P payment apps include the following:

  • Venmo
  • PayPal
  • Zelle
  • Cash App
  • Apple Pay
  • Google Pay

The most important thing to know about how P2P payment apps work is that the experience is essentially the same as handing someone cash. This means that in most cases, there’s no recourse if you send money to the wrong person or get scammed, with PayPal being an exception thanks to its Purchase Protection option. (Apple Pay and Google Pay do offer protection if you have linked your account to a credit card.)

In order to use one of these apps, you are required to link your checking account or a credit card to the app for verification purposes. You can leave any money you receive in your app for future use, or you have the option of transferring it to your credit union or bank account.

Some of these personal payment options have both a mobile and desktop option, including PayPal, Apple Pay, and Google Pay. Others are only apps, including the hugely popular Venmo. A lot of retailers accept mobile wallets like Apple Pay in stores and online.

What are common peer-to-peer payment scams?

Let’s review some of the most common peer-to-peer payment scams. Keep in mind that many of these have variations. In the next section, we’ll talk about how to spot a suspicious P2P transaction or request.

Fraud alert

If you’ve ever received a fraud alert from your credit union, credit card company or bank, you know how stressful it can be. Your adrenaline levels rocket, and you hurry to take immediate action to learn what happened and protect yourself.

A common P2P payment scam involves sending an email or text notifying a user of a fraudulent transaction. In most cases, the scammer will provide detailed instructions of the steps the target needs to take, including sending money to reverse the transaction. Of course, there is no fraud and if you send money to the link provided, all you will do is lose your money.


This next scam is one where freelancers and gig workers are most at risk. It involves someone hiring you to do work and sending a payment that’s for more than what they agreed to pay you. They then ask you to send the overpayment amount to a third party.

The scam part is that the money they sent was fraudulently obtained. By sending it to you and asking you to forward some of it, they are essentially laundering those funds through you. If you comply with their request, you’ll be out the money you sent once the fraud is discovered. Keep in mind that this scam may involve someone sending a (forged) check and asking you to forward the overpayment using a P2P payment app.

Phony merchants

Another common P2P payment fraud involves a scammer posing as a legitimate business. When you order goods and services from them, they provide a P2P address to send your payment. Then they vanish and you never receive what you purchased.

It’s important to keep in mind that while some merchants do accept P2P payments, most do not unless it’s at a point of sale (e.g. a cash register). The danger is paying using a P2P transaction before you have received the product you’re paying for.


Phishing scams have been around for decades. They usually involve someone sending an email and asking the recipient to verify their account information by clicking an embedded link. The link leads the target to a spoofed page that looks like it comes from the P2P app or a financial institution and they’re prompted to enter their account information.

Once the scammer has the account information, they can log in, change the password, transfer funds, and so on. They may also be able to use personal information to set up their own P2P account where they use your money.

Accidental payments

One of the scams that’s easiest to fall for is the one that involves a scammer sending money to a target and then messaging them saying the money was sent in error and asking for a refund. It seems like a simple enough request but like the overpayment scam, it is a modern version of money laundering.

If the target refunds the money, they have made themselves part of a fraud and may be out the money they sent once the fraud is detected.

Can I borrow your phone?

The simplest scam of all involves a scammer asking a target if they can borrow their phone to make a call or look something up. Once a bad actor has their hands on your phone, it’s possible for them to access your P2P apps and use them to send money to themselves or an accomplice.

A lot of people haven’t enabled two-factor authentication to use an app and in some cases, that may not even be an option. Unfortunately, that means that anybody in possession of your unlocked phone can access your account.

What are common indicators of suspicious P2P transactions?

Now that you’re familiar with some of the most common P2P scams, here are some of the warning signs that you’ve been targeted. It’s important to familiarize yourself with these, so you can avoid being victimized:

  • Unexpected messages should be a red flag. If you receive a text, email or phone call out of the blue advising you of fraudulent activity or asking to verify your information, it may be a scam and you should treat it as such.
    • As part of our commitment to provide a safe and secure banking environment, our membership is enrolled in advanced fraud alerts to keep them informed when fraud is suspected so that the member will be able to respond quickly to confirm the legitimacy of these transactions. If you an Addition Financial member and have any doubt about the authenticity of a call from someone claiming to represent Addition Financial, hang up and call the Addition Financial Contact Center at (407) 896-9411 or (800) 771-9411, outside Orlando.
  • Unexpected payments, particularly if they come from someone you don’t know, are also an indicator of attempted fraud. While we all know that it’s important to be careful when sending money, and mistakes are certainly possible, it’s important to be vigilant and not send money back to someone without verifying their claim first.
  • Any communication that includes an embedded link and asks you to click it to verify information or refund money should be viewed with suspicion. If you have any doubt at all as to the link’s safety, don’t click on it.
  • Any overpayment should be viewed with suspicion. While mistakes are certainly possible, you’ll be better protected if you proceed with caution when it happens.
  • Impersonal salutations in emails are also a warning sign. Some financial institutions use personalized greetings, so pay attention to what your credit union or bank does and be wary of any inconsistencies. You should also pay attention to the sending address' email domain.

Understanding the warning signs can help you avoid being scammed out of your money.

How do you protect yourself from peer-to-peer payment scams?

Here are some tips to help you protect yourself and your money from peer-to-peer payment scams:

  1. Don’t lend your phone to anybody you don’t know and trust. If someone is particularly insistent or seems like they legitimately need help, you can always offer to make a call on their behalf.
  2. Don’t click on embedded links. If you’re on a laptop or computer, you can hover your mouse over the link to see the complete URL and in the case of a phishing message, you’ll be able to tell if it’s legitimate or not. The easiest way to deal with something like this is to use your credit union or bank mobile app to check your account or visit their website by typing in the URL yourself.
  3. If you receive a payment from someone you don’t know, don’t send money back to them. Instead, contact the P2P app and report the activity.
  4. Report overpayments as well. If you receive a check, do not cash it. Instead, return it to the sender or shred it. The moment you cash it, you become part of the fraud being perpetrated.
  5. Don’t use P2P payment apps to buy products you haven’t received. It’s one thing to use Apple Pay at a cash register when you have a product in hand and another to use it to pay someone claiming to be a merchant who promises to send you a product after you pay.
  6. Double check before sending money. While this isn’t a scam per se, you should always verify information before you send money to anybody. It may be impossible to get it back if you send it to the wrong party.
  7. Enable multi-factor authentication whenever possible. Your best bet to protect yourself is to change your security settings to require biometrics or entry of a one-time, texted code before sending money.
  8. Report any fraud as soon as you become aware of it. If you are targeted, make sure to report the fraud to your financial institution, the P2P app, the local authorities, the Federal Trade Commission and the three main credit bureaus. 

Doing these things will minimize your risk of falling for a scam and help protect you from people who want to take your money.

Peer-to-peer payment security checklist

Protect Your Hard-Earned Money with Addition Financial

Using P2P payment apps is convenient and can be safe provided you know how to recognize and avoid P2P payment scams. The information we’ve provided here can help you protect yourself and your money.

Are you looking for a financial institution that cares as much about protecting your money as you do? Addition Financial is here for you. Click here to learn about the benefits of membership and apply today.

The content provided here is not legal, tax, accounting, financial or investment advice. Please consult with legal, tax, accounting, financial or investment professionals based on your specific needs or questions you may have. We do not make any guarantees as to accuracy or completeness of this information, do not support any third-party companies, products, or services described here, and take no liability or legal obligations for your use of this information.