To continue enjoying all the features of Navy Federal Online, please use a compatible browser. You can confirm your browser capability here.

Bottom Line Up Front

  • Money transfer apps make it easy to send payments, but they’re not the most secure.
  • Scammers are using peer-to-peer apps and pre-purchased gift card payments more and more.
  • Be careful who you pay using these services to avoid getting ripped off.

Time to Read

3 minutes

September 29, 2022

Who doesn’t love a good bargain? These days, some of the best buys can be found through independent online sellers like those on Craigslist or Facebook Marketplace. While these sellers may claim to have exactly what you’re looking for at a can’t-beat price, there are precautions you should take when buying from them. This is particularly true if you’re asked to make your payment using a peer-to-peer (P2P) money transfer app like Venmo®1, Zelle®2 or CashApp™*, or if you’re sending pre-purchased gift cards from merchants like Walmart®, Amazon and iTunes®*. This advice also extends to paying rental deposits for vacation homes and other instances of sending money or gift cards to people you don’t know. 

About Peer-to-Peer Payment Apps

In order to understand the potential dangers of using digital payment apps when purchasing from a seller you don’t know, it helps to learn how they work. P2P payment services are meant to provide quick and easy money transfers between two people. The online technology that these platforms run on allows you to electronically transfer funds from your linked bank account or debit card to another person’s account within minutes. 

According to The Hill, one thing many people don’t realize is that storing money in online payment systems or money transfer apps isn’t like storing it in a bank. Depending on the circumstances, it may not be fully federally insured against loss by the Federal Deposit Insurance Corporation (FDIC). So, it's a good idea to approach these opportunities with caution.

When Should You Pay Someone With Money Transfer Apps or Pre-Purchased Gift Cards?

You should only use money transfer apps and pre-purchased gift cards to pay for goods or services when you know and trust the seller. Would you feel safe paying the seller with cash? If the answer is no, then reconsider using P2P services or gift cards to pay. Paying with P2P or pre-purchased gift cards is just like using cash—once it’s gone, you don’t have any recourse if you get ripped off! So, while they’re great options for gifting or repaying friends and family, using these services to pay strangers makes things a bit more complicated. 

Independent online sellers and others are requesting payment via these methods more and more. If you receive a request to pay for goods or services with a pre-purchased gift card, it should serve as a red flag that the transaction may not be legitimate. That’s because if you use one of these methods to pay for an item and it turns out the item is fake or never delivered, you won’t be able to recover any of the money you sent. 

For example, let’s say you find tickets to a sold-out concert on Craigslist. You arrange to pay the seller via a P2P payment or pre-purchased gift card. You make the payment and wait for your tickets to arrive, but they never do. Now you’ve lost cash and have no tickets to show for it. To add insult to injury, it may be impossible for you to get back in touch with the seller to resolve the situation. 

Shop Smarter and Safer

Unfortunately, funding money transfer apps through your checking account or using your debit card to pre-purchase gift cards doesn’t make the cash exchange safer. The best way to protect yourself from scams is by only using P2P apps and prepaid gift cards to pay people and vendors you know and trust. Whenever possible, use your Navy Federal Credit Union debit or credit card for purchases. That way, you’re protected from reported transactions you didn’t authorize by the Zero Liability policy, and dispute processes exist to try to help you recover funds if you have a dispute with a merchant. 

At Navy Federal, our dedicated staff closely monitors your accounts for suspicious activity, protecting you from fraudulent charges on Zelle, Venmo, and other payment apps. Learn more about how we work to keep your accounts secure.

Key Takeaways Key Takeaways



VENMO is a trademark and brand of PayPal, Inc.


Zelle® and the Zelle®-related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

CashApp is a trademark of Square, Inc.
iTunes is a trademark of Apple, Inc., registered in the U.S. and other countries. iTunes is for legal or rightholder-authorized copying only. Don't steal music.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.