Why the money does not come back
Peer-to-peer payment apps were built for splitting dinner with friends, and their protections reflect that. Federal rules oblige the provider to investigate and refund unauthorized transfers, meaning someone got into your account and sent money without you. They do far less for authorized transfers, meaning you pressed send yourself, even if a liar talked you into it. Most losses fall in the second group. A credit card lets you dispute a purchase that never arrived, and a personal payment in one of these apps does not.
The scams built on that gap
- A stranger sends you money by mistake and asks you to send it back. The original payment came from a stolen card and will be clawed back from you later, so tell the sender to ask the app to reverse it and do nothing else.
- A buyer overpays for something you listed and asks for the difference back, which is the same trick.
- An email says you must upgrade to a business account, or pay a fee, before a payment can be released. The app never works that way.
- A caller claiming to be your bank's fraud department tells you to move money to yourself to protect it. Banks do not ask that, and the transfer goes to the caller.
- A seller of tickets, a puppy or an apartment deposit insists on a personal payment rather than a card.
Settings worth five minutes
Require a PIN or a fingerprint or face check to open the app and to send. Set your transaction feed to private, since some apps publish it by default, and a public feed shows strangers who you pay and when. Before paying someone new, confirm the username with them directly, check the profile photo and the last digits of the phone number, and send one dollar first if the amount is large.
Balances and purchases
Money parked in an app balance may not carry the federal deposit insurance your bank account has, and the terms differ by app and by feature, so transfer it out as routine. Some apps offer a goods-and-services option that charges the seller a small fee and gives the buyer purchase protection. Use that option with anyone you do not know, and treat a seller who refuses it as having answered your question.
Note Payments you receive for goods and services can be reported to the IRS by the app, under a threshold that has changed repeatedly. Reimbursements from friends are not income, so keep them clearly personal.
