Woman Frustrated with Payment App

Payment Apps (Like Venmo) Could Be a Pitfall for Scams

November 12, 2020

By Mason Dockter • Sioux City Journal
© Sioux City Journal, reprinted with permission

SIOUX CITY, Iowa — A stranger is selling a puppy on Facebook. He asks you to Venmo him $900 for the fur-baby, sight unseen.

Don't do it.

Person-to-person (or peer-to-peer, or P2P) payment apps have grown popular among the younger, notoriously cashless, set as a way to send money to friends and family -- to pay them back for a movie ticket or a dinner, or to send money for a birthday or Christmas. 

That's all well and good. But sending money to strangers in a transaction can be a risky proposition, and sometimes runs contrary to the apps' rules. 

"The primary way to think about these services is handing somebody the same in a cash denomination as what you're doing through your phone. It's just an electronic transfer," said Chris Jackson, assistant vice president of retail services at Security National Bank.

 

“It's like handing someone $100, and walking away. You can't go back.”

"A lot of the fraud that we're seeing is based on commerce. People aren't understanding that these services, these cash services, are not made for commerce. They're not made to purchase a pet over Facebook. It's not made to purchase a car over Facebook. These services were created for friend-to-friend transfers of cash," Jackson added. 

Today there are at least half a dozen popular P2P apps, including the well-known Venmo, Google Pay and Apple Pay, plus Zelle, Cash App and Snapcash. Facebook also offers a payment option through its Messenger service. Some of them work differently than others -- Google Pay and Apple Pay, for example, can be used in some purchase transactions. Venmo and Zelle, on the other hand, generally should not be used to pay strangers.

One of the main perils in P2P apps lies in the irrevocable nature of the transactions. Because these apps are in their infancy (relative to other forms of banking), consumer-protection rules have yet to catch up with them.

"You cannot pull it (back). I mean, it's just like handing someone $100, and walking away. You can't go back and pull that back. There's no recourse for the bank, or very little, and the fraudsters know that," said Lacey Gagnon, customer service center supervisor with Security National Bank. 

Read the entire Sioux City Journal article »

 

How to avoid falling for a P2P scam

  • P2P payment apps (perhaps the most popular one is Venmo) were not intended to be used for commercial transactions; they should not be used to purchase things from strangers. 
  • If you receive a phone call asking for your payment app login credentials or other vital banking information, hang up. Banks and financial service providers never call people unprompted asking for such information.
  • Have a good relationship with your bank and ask questions when you're unsure about something. 
  • Many banks offer their own P2P-type payment programs, which can offer a level of protection that's absent in third-party payment services. At Security National Bank, for example, you can use the "People Pay" feature on the SNB Mobile App.

 

The SNB Mobile App: A Secure Way to Pay Friends & Family

Learn more about People Pay & Mobile Banking »