P2P Fraud

Person-to-person (P2P) fraud impacts millions of Americans each year. Data from the Federal Trade Commission’s annual Sentinel Report (FTC) highlights total losses, via P2P and other payment channels, exceeding $2.7 billion in lost money in 2022. With coming shifts in liability for these types of financial losses from consumers to banks and fintechs , both financial institutions and consumers need to be on the lookout to identify and prevent potential P2P fraudulent transactions.

What is person-to-person (P2P) fraud?

P2P fraud is a consumer scam whereby a bad actor uses social engineering to trick a consumer into sending money through a P2P channel for fraudulent financial gain. Common financial channels include Zelle, Venmo, PayPal, CashApp, and more. Since the consumer authorizes the payment in P2P scams, referred to as an Authorized Push Payment,  the consumer has historically been responsible for taking on the financial loss of the P2P scam.

However, there’s a major shift in liability on the horizon for consumer scam losses. The Consumer Financial Protection Bureau (CFPB) along with several U.S. Senators have been pushing for banks and fintechs to take on these losses with the responsibility falling on the receiving depository account.

How to avoid P2P fraud

Understanding how P2P fraud works and best practices to prevent it can aid both consumers and banks in preventing fraud moving forward. Rohit Chopra, Director at the CFPB called the levels of P2P fraud in the U.S. frightening, with both regulation and education around P2P fraud becoming more important than ever. Here are several best practices that consumers and banks can follow to help identify and stop harmful P2P fraud.

Best practices for consumers:

• Only send money to people you know and trust
• Treat P2P payments like cash, don’t pay until you receive the product
• Utilize banking fraud alerts
• Optimize your security settings
• Take your time and don’t succumb to pressure
• Never send a payment to yourself
• Protect your own personal information
• Protect your passwords
• Don’t use public wifi

Best practices for banks and fintechs: 

• Utilize advanced identity fraud detection and prevention software at origination
• Push identity signals acquired at origination into your account management models, especially for more risky marginal scoring identities
• Perform portfolio scrubs against your existing account base to identify and weed out synthetic identities acting as money mules
• Enable real-time fraudulent alerts for consumers
• Provide heightened security measures

What should you do if you are a victim of P2P fraud?

What are common P2P fraud scams?

How Socure helps prevent P2P fraud

Socure is the leading SaaS identity fraud detection and prevention platform, leveraging proprietary machine learning models that contain the largest identity graph and set of performance feedback data in the industry. While an attack may be new to your bank or fintech organization, Socure has likely already seen and learned from the attack elsewhere in our network.

Socure offers several features to protect against P2P fraud. Our comprehensive RiskScores and Correlation Values can assess the risk of P2P credentials in real time, helping to identify and stop fraudulent activity as it happens.

Socure’s Portfolio Scrub accurately detects identity risks hiding in accounts and provides actionable strategies to take action. And, Sigma Synthetic Fraud pinpoints fake identities, helping banks and fintechs close the front door to new synthetic fraud attacks.

With Socure’s multi-faceted identity fraud and detection software, banks can stop fraud quickly and effectively, while ensuring a positive experience for good customers.

To learn how these solutions can help your unique organization, schedule time with our dedicated team here.