Dive Brief:
- About a fifth of adults who used a peer-to-peer payment platform in the last year have been a victim, or “intended victim,” of “financial exploitation” while using those services, according to an AARP report this month, based on a survey of 2,014 adults.
- Of those targeted in that exploitation, nearly six in 10 (59%) reported losing money via the peer-to-peer services, which was more than in similar bank or credit union situations, the report said. While 40% of victims lost between $101 and $1,000 via a peer-to-peer platform, about a third (33%) lost less than $100, and about a fifth (19%) lost more than $5,000, the report released Feb. 8 said.
- To fight the negative impact of P2P fraud, consumers using that tool mainly want assurances they’ll be reimbursed (71%), alerts for withdrawals above a specified amount (67%), the option for temporary holds on questionable transactions (67%) and fraud identification training for employees (62%).
Dive Insight:
The report suggested that P2P service providers may be losing some customers’ trust. “When it comes to addressing instances of financial exploitation, consumers are less likely to trust P2P platforms than banks and credit unions; consumers are also less likely to find the platforms as helpful as banks and credit unions,” the report said. “This phenomenon constitutes the helpfulness-and-trust gap.”
According to the survey results, 43% of P2P users are “more likely to trust” their peer-to-peer payment provider after they’ve become victims of financial exploitation, presumably because the provider makes amends in some way. Still, about a third (30%) said they were “less likely to trust” the company, the survey revealed.
In addition to existing threats, AARP’s report noted that artificial intelligence, voice cloning and other technologies may pose additional risks to consumers using peer-to-peer payment companies.
Other research indicates that payment fraud is on the rise among U.S. consumers. On Friday, the FTC said 2023 fraud losses increased 14% year-over-year to more than $10 billion. The agency didn’t immediately respond to a request for a more specific dollar figure.
The top payment methods for fraud losses were bank transfers or payments ($1.8 billion), cryptocurrency ($1.4 billion) and wire transfers ($343.7 million), according to the FTC’s findings.
“Digital tools are making it easier than ever to target hard-working Americans, and we see the effects of that in the data we’re releasing today,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “The FTC is working hard to take action against those scams.”
Alongside federal agencies, industry experts are raising the alarm about the growing risks on peer-to-peer payment platforms. In an interview with Payments Dive, Rob Rendell, global head of fraud market strategy and fraud prevention at software firm NICE Actimize, said that peer-to-peer payments networks must “step in and put some rigors and controls around the operating rules” regarding reimbursements, liabilities and other issues.
