payment apps

Are P2P (Peer-to-Peer) Payment Apps Safe to Use?

Peer-to-Peer (P2P) payment apps, commonly referred to as mobile payment apps, have become increasingly attractive to consumers. Payment apps are easy to set up, some only requiring a name and email address. However, the ease of setup also makes them ripe for abuse by criminals. Payment apps are thus another area in which a consumer must be vigilant and not fall victim to a potential scammer. When used carefully they can be a useful and fairly secure means of transmitting money.

What makes P2P Payment Platforms different?

P2P payment platforms are a form of “contactless” digital payments (through companies such as PayPal, Venmo, Zelle, Apple Pay or Cash App) where one can transfer money through one of these apps from one bank account to another. The Pew Charitable Trusts conducted a 2018 survey where it found nearly 95% of consumers reported using at least one traditional credit card, compared with 56% who reported using a mobile payment. During the pandemic, however, the growth and usage of these types of digital payments, which allowed for socially distant transactions, has skyrocketed. One of the central concerns regarding P2P payments is that the transactions themselves are treated very much like cash, meaning that under the law these transactions do not have the protections afforded by other payment options.

Other than cash, a consumer has several choices when making payments. One can use a credit card, a debit card or money transfer services. All of these other options have protections afforded to consumer under the laws through the Fair Credit Bill Act for credit cards or the Electronic Fund Transfer Act for debit or wire transfer transactions.


However, these laws do not apply to P2P payments, and a consumer only has the protections voluntarily given by the companies in their terms of service. In addition, if a payment is accidentally misdirected, the providers have no means of helping a consumer if a recipient refuses to return the misdirected funds. This also means that if you are tricked into sending money to a scammer, there is no requirement under the law for the P2P services to return the funds or to help you recover the funds. In fact, if you dispute the transaction to your bank or credit card company, and have the dispute upheld for fraud, you should know that the payment app will never go negative and will either take funds later transferred or engage in debt collection. For that reason, when shopping online, it is important to use credit cards as they offer the greatest purchase protection when compared to debit cards, wire transfers or payment apps.

Another looming concern for the use of P2P apps is the potential for your device (computer or cell phone) to be affected by malware. This would allow scammers to access your personal information and take funds far greater than what you permitted for the intended transaction.

Protecting Yourself

To secure a P2P app, make sure that it has multifactor authentication (MFA). MFA is an electronic authentication method in which a user is granted access to a website or application only after successfully presenting two or more pieces of evidence (or factors) to prove that one is the intended party using the app.

Additionally, within these companies’ terms of service is a right reserved to use your data for unrelated purposes and to sell your data to third parties. When given the option, users should set their app at the highest level of privacy or security that can be chosen by the user. Venmo, for example, defaults to sharing all your transactions online, making it easy to target you for future Venmo scams.

Sadly, there are numerous situations in which these tools are used to perpetuate frauds or scams by criminals. The ease with which money is transferred provides a scammer easier and immediate access to stolen money. Often this is done by setting up an account either in someone else’s name (a spouse or minor child) or in the name of a person who has been a victim of identity fraud. In fact, accounts can be set up with bogus names like “BMW Beast” and connected to transient email addresses, disposable cell phone numbers and prepaid credit cards – making the account virtually untraceable. Difficulty in contacting customer service makes fake websites attractive to opportunistic criminals. For example, CashApp has no phone number for its customer service. This has resulted in the proliferation of fake websites purporting to be CashApp that steal money from you and the business you’ve paid.

Consumer agencies receive complaints involving pet sellers, mobile auto repair vendors, online marketplace sales (craigslist, letgo, etc.) and straight-up phone scams where the goods, services or alleged bill payment was never delivered. Prospective employees have unwittingly engaged in check scams where the “employer” asks for money in advance for equipment to be used in the “workplace.” Sometimes, payment through the P2P app is “reimbursed” through the use of a fraudulent check. It can take up to 10 business days for the funds of a regular check to fully clear, especially one of a larger amount. This would give the scammer time to have the funds be temporarily made available to your account and have you submit the payment via app, only to have the check bounce later.

Best for Friends and Family

In essence, an extra degree of caution should be given to any arms-length transaction with a merchant with which you have not previously done business. Since these systems were intended for payments between friends and family, they are not the way to shop online or to pay for business expenses. Avoid using “friends and family” or “gift” designations when making payments to businesses. The central piece of advice from the Montgomery County Office of Consumer Protection is to:

  • avoid using these payment apps to send money to persons that you do not personally know.
  • make sure to keep your app up to date by downloading the most recent updates to the software.
  • set up multifactor authentication when offered.
  • set your privacy settings to maximum.

For more information about this or other consumer questions, contact the Montgomery County Office of Consumer Protection at or visit

Parent Input Please

Each month we have a parenting-inspired question where we ask parents to share their tips on our Facebook page. Then we share them with you the following month!

This month’s question: Do you use payment apps? Have you ever had an issue with using a payment app?