Beware of P2P apps: Consumer Reports

Consumer Reports

CONSUMER REPORTS — Apps like Venmo and Zelle make paying for things a breeze, but many of these apps don’t offer the same level of protection against scams as most credit cards. Consumer Reports reveals the warning signs, and what you can do to make sure you don’t fall victim to scammers.

Daniela Rivera thought Instagram would be the best place to look for a new puppy for her grandparents. She quickly fell in love with a Goldendoodle named “Prince” who was up for adoption.

Rivera said, “It was like love at first sight. He was so, so cute.”\When she contacted the owner of the Instagram account, she says he sent her certifications, vaccination reports, even videos.

“It seemed pretty legit,” Rivera said.

But when it was time for her to send over the money, what she got back instead was a lesson in online scams. The alleged scammer asked Rivera to pay $850 using the peer-to-peer payment app Zelle. When she sent him the money, he vanished.

Because Rivera paid the alleged scammer directly with a peer-to-peer payment service, she had no way to recover the money, a problem Consumer Reports says happens way too often.

“Peer-to-peer payment apps aren’t banks and they’re not credit cards, which makes it much harder for consumers to have recourse and get their money back,” said Octavio Blanco, Consumer Reports Money Editor.

In an AARP survey of Americans 18 and older, more than half of respondents incorrectly thought they could reclaim money sent in error when using peer-to-peer payment apps.

Early Warnings Service, the network operator behind Zelle, told Consumer Reports that consumers should only send money to people they know and trust when using Zelle. Treat it like cash, and beware of ‘too good to be true’ situations.

Blanco said, “Until laws are changed, then consumers are going to have to be really careful when they use peer-to-peer payment apps.”

Consumer Reports has some P2P tips to help protect yourself:

  • Send money only to people you know and trust
  • Exercise caution when paying businesses with P2P apps.
  • If you have any suspicion of something being a scam, go to the Better Business Bureau’s “Scam Tracker” website. It can give you a better idea of the product or service you’re looking for is an easy scam target.

As for Rivera, she says she’ll still use P2P payment apps, but with much more caution, only sending money to family and friends.

Consumer Reports warns not to use a P2P app for business purposes. The terms of service for most apps prohibit the use of purchasing goods and services. Look instead for a payment app specifically created for business users, like Square Cash for Business or Paypal.

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