Holiday Hustle: Tips for Protecting Your Purchases

When should you pay with a money transfer app or gift card?

By Navy Federal December 6, 2018

Who doesn’t want a great deal when shopping for gifts? Every holiday season, millions of shoppers scour the holiday ads and get up early for the best possible prices. In your search for the best possible deal, you may also turn to independent, online sellers such as those on Craigslist. These sellers can be the key to finding unique or hard-to-find items while saving a chunk of change. But be careful—there are precautions you should take if you’re asked to make your payment using a money-sending app or sending pre-purchased gift cards from such merchants as Walmart®, Amazon and iTunes®. Online sellers are requesting payment via these methods on an ever increasing basis and should be viewed as a possible scam because it’s almost impossible for a buyer to get their money back should the seller not hold up their end of the deal.

About Person-to-Person Payment Apps

In order to understand the potential danger of using digital payment apps when purchasing from a seller you don’t know, it helps to be familiar with how they work. Person-to-person (P2P) payment services such as Zelle®, Cash App or Venmo are meant to provide quick and easy money transfers between two people.

When Should You Pay Someone With P2P Apps or Pre-Purchased Gift Cards?

P2P apps and pre-purchased gift cards are similar in that the value they hold is essentially cash. This makes them great options for gifting or repaying friends and family. It’s when funds are sent to strangers that things become complicated. This means if you purchase an item from someone online and it turns out the item is fake or is never delivered, you won’t be able to recover any of the money you sent. For example, if someone goes on Craigslist and finds a listing for tickets to a sold-out concert, they could contact the seller about purchasing them and send the money via a P2P payment or pre-purchased gift card. However, due to the limitations of accountability for these payment methods, there’s the chance the seller might never send the tickets to the buyer, who may not be able to contact the seller again. So, if you receive a request to pay for goods or services with a pre-purchased gift card, such as those from Walmart or Target, it should serve as a red flag that the transaction may not be legitimate.

Shop Smart This Holiday Season

Protect yourself from scams by using your Navy Federal Credit Union Debit or Credit Card at merchants you know and trust. At Navy Federal, our dedicated staff closely monitors your accounts for suspicious activity, protecting you from fraudulent charges. Learn more about how we work to keep your accounts secure about how we work to keep your accounts secure.

This article 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.