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Peer-to-peer mobile payment apps poses risk for users

Posted at 1:20 PM, Jan 25, 2023

While peer-to-peer mobile payment apps like Venmo and Zelle are convenient, they come with risks, Consumer Reports said.

Consumer Reports said these companies need to do more to protect users’ privacy and from being scammed.

“Peer-to-peer payment apps are a convenient and easy way to send money to others with just a few taps on your phone,” said Delicia Hand, director of financial fairness for Consumer Reports. “But consumers may end up losing money if they send a payment to the wrong person or fall victim to fraud or scams and are putting their privacy at risk when using a P2P payment app.”

A 2022 survey found that 64 percent have used these sorts of apps, with at least two in five using them monthly.

Of those who use the apps, Consumer Reports said 12 percent have accidentally sent money to the wrong person and 9 percent have been scammed.

Consumer Reports said that the apps will not refund consumers who accidentally send money to the wrong person, nor will they compensate users who are victimized by scams.

The group also says that these mobile apps collect large amounts of data on users and make it hard for users to delete.

Consumer Reports issued the following recommendations to those who use these apps:

  • Confirm the recipient’s identity before sending money. Do that with a phone number, email address, or a QR code. Cash App, Venmo and Zelle give users the ability to scan a QR code that appears on the recipient’s device.  
  • Send a $1 test payment and confirm it was received by the right person. That’s especially important if you are sending a lot of money. 
  • Move money from your P2P account to your bank account as soon as possible. That assures your funds are FDIC insured in your bank.
  • Turn on all identity verification options available in the P2P app. With those features activated, anyone trying to use the account will have to go through additional security measures, such as two-factor authentication.
  • Frequently monitor your P2P accounts.  You may be able to catch problems early enough to report it to companies and not be on the hook for unauthorized payments.
  • Delete any P2P app you don’t use. It’s not enough to simply remove the app from your phone; instead, to make sure you’ve closed and deleted the account, select the “delete account” option within the app.  
  • Opt out of binding arbitration if possible. Cash App, Venmo and Zelle give users 30 days to opt out of the requirement by mailing a written notice. Apple Cash does not allow users to opt out. And if you do have a dispute, try negotiating with the company before going to arbitration.