10 Ways to Stopping P2P Payment Fraud in its Tracks


For a comprehensive look at P2P payment app fraud and guidelines for credit unions to help members detect and thwart this emerging threat,PSCU’s white paper, “Peer-to-Peer (P2P) Payment App Fraud: Navigating the New Payment Landscape,” can be downloaded here.

Cash or checks have historically been the easiest way to pay friends or acquaintances. But P2P (peer-to-peer) payment technologies have introduced a new way of sending money that is fast, convenient and does not require carrying cash or checks. Consumers commonly use P2P paymentsto transfer money to people they know –sending a gift, splitting a restaurant bill, paying a neighbor at a yard sale and other similar situations. The COVID-19 pandemic has also accelerated P2P payment usage as consumers look for payment options that reduce contact with others. As P2P payments have become more mainstream, many large financial institutions, including Bank of America, Chase and Wells Fargo, are partnering together to offer P2P services through the Zelle network.

The acceleration of P2P payments in the U.S. is being driven primarilyby two top P2P apps: Venmo and Zelle. According to PSCU’s annual Eye on Payments study, credit union members that identified digital payment methods like Venmo, PayPal and Zelle as their primary payment method increased from 8% in 2019 to 17% in 2020. The study also revealed consumers from all generations are dipping their toes into P2P payments to varying degrees. Of note, more than one-third of Younger Millennials (members ages 23-30) use these methods as their primary method of payment.

The downside of this new method of payment? Fraudsters are also catching on, primarily because theyare able to prey on consumer trust and the ease of sending funds via a P2P method. Pandemic-related scams have exploded as fraudsters attempt to exploit fear of the virus using P2P payment methods to cash in. The best way credit unions can help prevent members from falling victim to P2P payment fraud is through education and proactive detection. Credit unions should share the following tips with members through every possible touchpoint and channel:

  1. Never send money to someone you do not know personally. When making a purchase, use a service with buyer protection.
  2. Confirm the username or phone number of the person to which you are trying to send money, and send a small test amount first to confirm the intended recipient receives it.
  3. Almost every popular P2P platform offers the ability to create a personal identification number (PIN) or use facial recognition. Take advantage of these stronger security measures.
  4. Before using any P2P service, search the app for customer service contacts and procedures so you know where to go and what kind of help to expect in the event you encounter an issue.
  5. Turn on auto-updates for your device to ensure P2P apps have the latest updates and protections.
  6. Set up transaction or account alerts and controls through your credit union so you will be notified of payments or any account changes.
  7. Do not let strangers borrow your phone. They could pretend to be using it for an emergency but really be using it to transfer money from your app to their account.
  8. Consider linking your credit union-issued credit card in the app instead of a debit card so you have more built-in fraud protection.
  9. Freeze or lock your card immediately if you suspect fraud. Contact the P2P app customer service to initiate a dispute, then separately contact your credit union for further instructions.
  10. If you have been a victim, consider lodging a complaint with the Consumer Financial Protection Bureau’s Consumer Complaint Database and at via a secure online complaint form.

As adoption of P2P payment technologies continues to increase, allowing for P2P transactions will help credit unions remain competitive. However, awareness of and vigilance surrounding P2P payment fraud for both credit unions and their members is key to thwarting this emerging threat.

David Ver Eecke is a Senior Fraud Product Manager at PSCU. David knows that the cooperative nature of credit unions provides a unique advantage when it comes to stopping fraud. When he isn’t working on products to increase payment security for credit unions and wage war against fraudsters, he finds time to write about topics on risk and fraud. David has worked in the financial services industry focusing on fraud and risk for over seven years.

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