Retirement Planning, Elder Law, and Senior Finance Protect Yourself Against Payment Scams 3/7/2024 | By Lisa Gerstner, Kiplinger’s Personal Finance Peer-to-peer payment services provide a convenient way to transfer money among family members and friends, but they have some significant downsides when it comes to fraud protections. Read on to learn how to protect yourself against payment scams. Regulatory standards don’t require these services to reimburse users who are tricked into sending money to scammers. For example, a crook may pose as a representative from a victim’s bank and request a funds transfer through an app such as Cash App, PayPal, Venmo or Zelle. Once the victim initiates the transfer, the money goes to the crook. The good news is that some scam victims who use Zelle, a peer-to-peer service owned by several major banks, are getting relief. Last summer, financial institutions that participate in Zelle’s network began reimbursing customers who sent money to criminals claiming to be from a government agency, bank or existing service provider. The move follows criticisms from some lawmakers that fraud and theft had become rampant on the platform. Use payment apps to send money only to people you know and trust. Broader federal oversight of peer-to-peer services may be on the way, too. Last fall, the Consumer Financial Protection Bureau (CFPB) proposed that large nonbank companies offering services such as digital wallets and payment apps go through the same supervisory exams that the CFPB performs on banks. If the CFPB’s proposed rules are finalized, large providers would have to follow the same rules as large banks, credit unions and other institutions that the CFPB currently oversees, including compliance with certain consumer rights regarding money transfers and privacy. Zelle’s move to reimburse some fraud victims is encouraging, but its policy doesn’t cover all types of scams. And other major peer-to-peer payment services don’t guarantee reimbursement to those who are duped into sending money to fraudsters. Use payment apps to send money only to people you know and trust. Legitimate entities will not demand that you send them money with a peer-to-peer app. Notably, if a criminal hacks into your payment-app account, the liability protections for the underlying payment method apply. If a crook logs in to your Venmo app and transfers money with a debit card that’s connected to the account, for example, you have no liability if you report the loss within 60 days after your statement is sent to you. Lisa Gerstner is editor at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com. ©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC. Read more about protecting yourself from scams on Seniors Guide: Protect Against Scams – Be Suspicious! Read More Lisa Gerstner, Kiplinger’s Personal Finance Lisa Gerstner is a contributing editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.