Unfortunately for the Sister Swifties, they were right – they never recouped their loss. While Reg E does provide consumer protection from liability in certain instances, those protections do not apply when a consumer does in fact authorize an electronic payment, which was the case in this scenario.

How could these sisters have spotted the scam? Did you notice moments where they made hasty decisions with little precaution? Did you identify any red flags that should have prompted them to pause? Help your members learn from their mistakes and educate them on what to look out for in this common person-to-person (P2P) fraud scheme!

P2P Fraud Red Flags

• As Britney detected, the ticket price was too good for the seats being offered.
• Portions of the ticket screenshots the scammer sent to Britney were blacked out.
• Carla mentioned that Ticketmaster probably offered a way to purchase/transfer tickets, but in their haste, Britney and Lisa disregarded her thought and moved right into talking about transferring payment through Venmo since that is what the scammer requested, ignoring the recommended protocol for ticket resale.
• To seem more legitimate, the scammer acted as though she was nervous Britney would scam her when negotiating.
• The scammer utilized a Venmo account with a different name to request payment.
• The email the scammer provided was not a real email account and was not recognized by Venmo.
• Once the initial $400 was sent, the scammer claimed she misunderstood their agreement and needed an additional $400 before sending the tickets. Re-reading the conversation, Britney later realized that their conversation and agreement was very clear and didn’t leave room for misinterpretation.

Can you spot anything more? The sisters suspected a possible fraud scheme the entire time, yet still ignored all of the above red flags. Why? Because they let their excitement cloud their judgement and they skipped over the all-important research process due to distractions and urgency.

Skyrocketing P2P Scams

Unfortunately, these P2P scams happen all the time. According to Consumer Reports (2022), 18% of consumers use a P2P service once a week. Of these heavy users, half report having been victims of a scam. And the fraudsters are getting bolder. The average dollar amount of fraud attempted through P2P channel is 60% higher than the average card-not-present fraud attempt.

What steps can credit unions take to protect members?

Preventing P2P Fraud Pitfalls

Member education is critical in the ongoing fight against P2P fraud. The NCUA has provided some useful tips to keep money safe when using P2P apps:

1. Question

Ask yourself if using a P2P payment app makes sense for your transaction. Use P2P payment apps only with people you know and trust, if possible. You should never have to transfer money to receive money from an app. If you are asked to do that, it’s a scam.

2. Verify

Always double-check the recipient’s information to make sure you’re sending money to the right person, even if it is someone you know. A good practice is to have the intended recipient send you a request before you send the money.

3. Review

Familiarize yourself with the fraud protection policies of the P2P payment app that you are using and understand whether and how you can recover funds if a problem arises.

4. Reconsider

If your P2P app is linked to a checking account as a source of funds, consider linking instead to a credit card. A credit card provides added protection if you don’t receive the goods or services you purchased.

5. Protect

Protect your payment app and log in with the strongest authentication available, like Face ID or Touch ID, two-factor authentication, a strong password, or a PIN. Turn off automatic login settings and set up notifications for all payment transactions.

6. Contact

Never provide sensitive account information to someone on the phone or via links in an email. Legitimate customer service representatives will not ask for this information. If someone contacts you requesting this information, contact customer service directly to confirm. Scammers can spoof emails and phone numbers.

We're Here to Help

Alloya stands ready to assist credit unions in preventing fraud and making payment processing more secure. We welcome feedback from our credit union members on how we can better help you in this important effort.