The popularity of peer-to-peer (P2P) apps that allow users to send money to friends and family is on the rise. These apps make it easy and fast for people to exchange funds, but they come with a few risks that consumers need to be aware of.
Some P2P apps can be used to facilitate scams and fraud. For example, a fraudster might offer an investment opportunity or lottery prize that sounds too good to be true and ask for a wire transfer to claim the prize. The convenience and speed of P2P payments can work against consumers in these cases, as unauthorized transfers can happen quickly.
Other risks include the ability for hackers to use P2P services to directly access consumers' linked bank accounts and cards. In addition, there are no regulations that protect consumer funds lost or stolen from non-bank P2P products. While many P2P apps provide disclosures and warnings about risk, these often go unheeded by consumers. In some cases, the terms and conditions of P2P products also lack a fair dispute resolution process for consumers.
To minimize these risks, consumers should always follow best practices when using a P2P app. For instance, they should only connect with their close friends and family and should only transfer money to them using the app's secure features, such as two-factor authentication or fingerprint and facial recognition identification. Also, they should check their privacy settings regularly to ensure that they are not exposing information or transactions they don't want others to see.