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Payment fraud and money transfer scams account for a portion of the $20.877 billion consumers lost to online scams in 2025, according to the FBI’s annual Internet Crime Report. Globally, payment fraud losses are expected to reach $362 billion by 2028. If you make payments or send and receive funds online, it’s important to know how to protect yourself against common payment scams.
Key Points
• Payment fraud occurs when someone makes unauthorized transactions to steal money from someone else.
• Money transfer scams commonly involve person-to-person (P2P) financial apps like Venmo, or PayPal.
• Phishing scams, overpayment scams, and imposter scams are some of the most common ways money transfer fraud occurs.
• Learning key red flags of payment scams and monitoring a bank account for unauthorized transactions are ways an individual may help protect themselves against fraud.
• If you believe you’ve been a victim of payment fraud, report it to your bank and law enforcement and consider closing or freezing your bank account and credit card.
Understanding Payment Fraud in a Digital World
Payment fraud occurs when unauthorized transactions are made for the sole purpose of stealing money from an individual or business. Payment fraud can be especially costly for consumers if their identity is stolen to commit payment fraud, while businesses suffer financial losses for stolen goods or services, chargebacks, or forced refunds.
What Is Online Payment Fraud?
Online payment fraud involves the use of false or stolen financial information to pay for goods and services online, rather than in person. This type of payment fraud typically involves the use of stolen credit cards or debit cards to complete transactions. For example, scammers can execute online payment fraud through:
• Account takeover: Account takeover occurs when someone hacks a bank account or credit card and uses it to complete fraudulent purchases.
• Card-not-present fraud: Card-not-present fraud happens when stolen card information is specifically used to make fraudulent purchases online.
According to the FBI’s data, credit card and check payment fraud cost consumers $282.7 million in 2025.
Authorized vs Unauthorized Transactions under Regulation E
Regulation E is a federal rule that limits consumer liability for unauthorized transactions associated with electronic funds transfers (EFTs). This regulation, which is part of the Electronic Fund Transfer Act (EFTA), defines unauthorized transfers as “an EFT from a consumer’s account initiated by a person other than the consumer without actual authority to initiate the transfer and from which the consumer receives no benefit.”
This initially meant that transactions were considered to be unauthorized only if someone other than you completed them. In other words, if you initiated an online payment transaction that turned out to be part of a scam, it could still be considered authorized under Regulation E. However, guidance issued in 2025 from the Consumer Federal Protection Bureau about Regulation E says that when a fraudster uses deception to gain access to an account and uses it to make an EFT, it can be considered an unauthorized transfer.
If an unauthorized EFT hits your account, your liability is limited to $50 if you report it within two business days after learning of the fraud. Waiting longer than two days to report it can increase your liability to $500; waiting more than 60 days means you assume full liability for the loss.
3 Common Types of Payment Fraud and Scams
Payment scams take different forms but some are more common than others. Some of the types of payment fraud most favored by scammers involve payment scams committed across peer-to-peer apps, fake overpayments, and phishing/imposter scams.
1. Peer-to-Peer App Scams
Peer-to-peer apps make it convenient to pay for things online and send instant transfers, but they’re also an easy target for scammers.
According to SoFi’s 2026 Sending Money Survey, 23% of payment app users have been victims of digital payment scams. Here are a few examples of P2P payment scams:
• Fake goods and services: Scammers may post something for sale online, like concert tickets or a designer bag. When an interested buyer comes along, they insist they can only take payment via a P2P app. The buyer pays up and the seller disappears with their money without delivering anything in exchange.
• Accidental transfer/reversal: Another common tactic scammers use is to claim that they “accidentally” sent a payment to someone through a P2P app, then reach out to the person to ask for a refund. You see a deposit you weren’t expecting so you reverse it, only to find out that the scammer used stolen funds to make the transfer. The scammer now has the stolen funds that were initially sent, plus the payment you reversed.
2. Overpayment and Fake Sending Money Tactics
Overpayment scams occur when you’re selling something online and a fraudster, who may be using a stolen credit card or bank account information, buys it and pays more than the sale price. They then ask you to refund the difference to them via a P2P app. You agree and ship the item only to find out that the original payment bounced. You lose whatever it was you were selling, the “payment” from the buyer, plus the difference you refunded.
3. Phishing and Bank Imposter Scams
Phishing scams typically attempt to get you to share personal or financial information for the purpose of gaining access to your bank account or credit card accounts. Phishing can take the form of legitimate-looking emails or text messages from a company urging you to click on a link to fix a “problem” with your account, for instance.
Bank imposter scams are a specific type of imposter scam in which you get a message from what appears to be your bank asking you to verify your account information. You click a link included in the message, thinking you’re logging in to your bank’s website. What you’re really doing is sharing your login details through a spoofed site, giving the scammer access to your money.
How Do Money Transfer Scams Work?
Generally speaking, money transfer scams work by tricking you into sending money to someone else voluntarily. You might transfer money online through a P2P app, a wire transaction, or an ACH transfer from your bank. Some of the tactics used in payment fraud scams may also be used in money transfer scams, including impersonation, overpayments, and accidental transfers.
Some money transfer scams are tied to fake job offers. You might be approached with a job offer, only to be told that you need to pay a fee to cover the cost of equipment or software you’ll need for the role. You send the money through a wire transfer and then all communication with the hiring company suddenly stops. Your money is gone and there’s no job to be had. The FBI estimates that this type of scam cost Americans $362.9 million in 2025.
How to Spot the Red Flags of Payment Scams
Payment scams, including fake sending money scams, are increasingly sophisticated, but they may be possible to spot if you know what to look for. Some common red flags include:
• Unusual payment methods: Scammers may ask for payment for goods or services using unusual payment methods, like cryptocurrency, wire transfers, or prepaid gift cards.
• Pressure tactics: Some scams rely on creating a sense of urgency or pressure to get victims to send money right away. For example, you might be told you’ve won a sweepstakes, but to claim it, you need to pay an upfront fee right away.
• Payments from strangers: If you receive money from someone you don’t know through a P2P app, don’t refund it. Instead, contact the app’s customer support to notify them of the transaction. They should be able to sort out the transaction without requiring you to do anything. It may also be helpful to understand the safety of mobile payment apps and how to use them securely.
• Overpayment/refund requests: If you sell items online, be specific about the types of payments you’re willing to accept. If someone asks for a refund stemming from an overpayment, wait until the original payment clears before sending any refund or shipping the items they purchased.
Proactive Steps to Protect Your Bank Account
There are several ways to enhance online banking security, starting with choosing a unique password. Don’t share your password with anyone and consider updating it periodically. Enable multi-factor authentication and/or biometric authentication for your account or your device.
Monitor your account activity regularly to look for unauthorized activity. Consider setting up alerts through your mobile banking app so you’re notified of new transactions, failed login attempts, or changes to your password or personal information to help secure your bank account.
Be wary of requests to deposit money to someone else’s account or make payments via wire transfer to people you don’t know.
What to Do if You Become a Victim of Financial Fraud
If you become a victim of financial fraud, immediately stop communicating with the scammer. Document all the details of the suspected fraud, including screenshots, text messages, emails, and payment confirmations from your bank or any P2P apps you use.
Report the fraud to your bank right away, and to law enforcement. Consider closing or freezing your checking account to prevent further transactions, and freezing your credit cards as well. If you keep any accounts open, monitor them closely for any new unauthorized transactions.
Also, file a complaint with the FBI’s Internet Crime Complaint Center and the Federal Trade Commission. The Consumer Financial Protection Bureau also maintains a complaint database you can submit your details to. You may also report the fraud to your state attorney general’s office. Stay in communication with law enforcement if they’re actively investigating your fraud case.
Safe Digital Banking with SoFi
If you’re looking for a bank with digital security measures, consider what SoFi offers. For example, two-factor authentication verifies an account holder’s identity via text or biometrics. Real-time fraud alerts let individuals keep tabs on what’s happening with their account even when they’re not logged in. And account holders can freeze their debit card through the SoFi mobile app if it’s lost or stolen.
The Takeaway
Payment fraud and money transfer scams are a segment of the tens of billions of dollars consumers lost to online fraud in 2025. Common scams include phishing, overpayment scams, and imposter scams. Knowing the red flags and staying alert for them, monitoring your bank account for unauthorized activity, and using multifactor or biometric authentication are strategies that may help keep your bank account and your money more secure.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What are the most common types of payment fraud?
Some of the most common types of payment fraud generally include phishing scams, imposter scams, and overpayment scams. Payment fraud scams often start on social media and end with a victim sending money to the scammer via a P2P app or directly from their bank account.
How can you tell if someone is fake sending money?
Fake money transfers typically involve someone you don’t know. Signs of a fake money transfer scam include pressure to send money quickly, requests for payment via unusual methods like cryptocurrency, or requests for refunds related to “accidental payments” or overpayments they sent to you.
Does Regulation E protect me if I am tricked into sending money?
Regulation E protects you by limiting your liability for unauthorized transactions. The wording of Regulation E initially implied that if you authorized a transaction, you were liable for it, even if you were tricked into sending the money. However, in 2025, updated guidance issued from the Consumer Federal Protection Bureau says that when a fraudster uses deception to gain access to an account and uses it to make an EFT, it can be considered an unauthorized EFT under Regulation E.
What should I do immediately if I wire money to a scammer?
If you wire money to a scammer, contact your bank or the wire service right away to request a reversal. You can also contact the bank of the person you wired the money to and notify them that the transaction is fraudulent. Document your interactions with the scammer and the details of the transaction, then file a police report.
How long does a bank have to investigate a fraud report?
When you report payment fraud to your bank, the bank generally has 10 days to investigate under Regulation E rules. The window extends to 20 days for new accounts. Once the investigation is complete the bank typically has to notify you of its findings and resolve the issue within 45 days.
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