How to avoid fraud with P2P and A2A transfers

For many people, shopping and paying bills online is second nature. And now, thanks to mobile payment apps, you can easily pay your friend or tip your hairdresser with a tap of your phone. But with the rise of mobile payment apps has also come a rise in fraud and scams. Add in the craziness of the holidays, and it can be easy to get distracted and fall victim to scams.

Read on to learn more about P2P and A2A payments with mobile transfer apps and how you can best protect yourself from scams.

What are P2P & A2A transfers and how do they work?

Peer-to-peer (P2P) payments let you send money directly to another person. Commonly known through money transfer apps like Venmo, PayPal, and Zelle, P2P payments allow you to send and receive money through your mobile device. Typically, funds are transferred electronically from your checking account but some apps like Venmo accept a credit or debit card to transfer funds, sometimes for a fee. P2P payments are free to send through Georgia’s Own Bill Pay, online or with mobile banking, and the recipient can receive the funds faster by opting to pay a small fee.

Account-to-account (A2A) or external transfers can be used to electronically transfer funds to your accounts at other financial institutions or send money to friends and family if you know their account information (routing number, account number, etc.). A2A transfers can be set up online or through mobile banking and usually require you to validate access to the external account—sometimes that’s instant and other times that’s done through micro-deposit validation. Once the access has been granted, you can set up one-time or recurring transfers to those external accounts. Unlike P2P payments, A2A transfers can take a few business days to process, depending on the institution(s).

Both forms of payment are best used with people you know and trust. If you send or receive money via A2A, you need to share bank account information—which can potentially put you at risk for fraud. On the other hand, P2P payments are essentially like cash. Once the money is gone, it is gone. And while all systems encrypt personal data and financial information, they can still be susceptible to hackers or scammers.

Most common scams: what to look out for

Unfortunately, scammers are creative and constantly developing new ways to steal your money. Knowing some of the more common types of scams can help you keep you and your money safe.

With P2P payment apps on the rise, scammers have started “accidentally” paying people and then asking for a refund. Never send the money back, and instead contact the P2P service about the error. These payments are typically made with stolen funds or hacked accounts that will eventually be flagged as fraud. If you return money to the scammer, the P2P service may take funds out of your account or hold you responsible.

Another common A2A scam tactic is the impersonation of your financial institution. You may get a call alerting you to “suspicious activity” on your account. You may be asked to send money or verify information like your bank account username and password, credit card or debit card information, or Social Security numbers. Never share this information—scammers can use this to create an account in your name, steal your identity, and access your accounts.

Similarly, scammers may pretend to be contacting you on behalf of the government. They might use the name of a real government agency, like the IRS or Medicare, or make up a name that sounds official. Other scams involve pretending to be from a business you know, like a utility company or a charity asking for donations. Do not share any give your personal or financial information in response to a request that you didn’t expect. Honest organizations do not request personal information via call, email, text, or A2A payments.

Lastly, there has been an increase in scammers posing as a legitimate business. They may request a P2P payment to reserve a product or service and then vanish after receiving payment. P2P payments should be treated like cash—never make any payments until you have received the product. If you must pay in advance, use your credit card for extra protection.

Best practices for avoiding fraud

The most important tip for avoiding fraud with P2P payments and apps is to only send money to people you know and trust. In the case of real-time P2P payments, these transactions are the equivalent of handing over cash—once the money has left your account, it is gone. If you have two-factor authorization set up to receive a one-time passcode, do not share it. Your financial institution should never ask you for this information.

When setting up A2A payments, rely on processors that are sponsored or associated with your bank, like Georgia’s Own Bill Pay. This will allow you to track your payments and ensure the security of your account. Additionally, you should only set up A2A transfers with people you fully trust.

Always keep an eye on your account transactions, and watch for notifications from your financial institution. If you see notifications about a transaction that you didn’t make, contact your institution immediately. The faster you respond, the better chance of stopping the fraud from occurring. You also should not ignore messages about information changes. If you see something has changed and you didn’t make that change, contact your institution immediately.

Can I get my money back?

If you find unauthorized payments or think you’ve paid a scammer, there are several steps you’ll want to take. If you’ve used a mobile payment app, you will want to contact the app directly. You also need to report it to the FTC and potentially file a police report. When you report a scam, you help the FTC and other law enforcement agencies stop scams.

Lastly, one of the most important things you should do is talk about it with your friends and family. Unfortunately, we are all susceptible to fraud, and talking about it may help others to see the signs before it is too late.

Final takeaways:

• Anyone and everyone can be susceptible to scams and fraud.
• Only pay people you know, and only set up A2A payments through your financial institution-sponsored payment options.
• Report any scams or fraud immediately to the correct organizations.

It is important to remember that fraud can happen to anyone, especially during this time of year as we may be distracted by friends and family. Keep your holidays happy and stay alert!

What is an appraisal and how can it affect your home loan?

After months of searching, you’ve finally found the perfect home and are already picturing your family relaxing in the den. The last thing you want is a problem during the loan process that derails your dream. Understanding the home-buying process is critical to making things go smoothly. One item you need to know is the home appraisal. What is a home appraisal, and how can it affect your home loan? Let’s dive in.

What is an appraisal?

When purchasing a home and applying for a mortgage, one of the first steps the lender will do is order an appraisal. The house will need to be evaluated by an independent, unbiased professional appraiser to estimate the home’s current market value. A home appraisal is an expert’s opinion of the value of a given property.

How is an appraisal based?

The value of a home is based on its general condition, age, location, and size. The number of bedrooms and bathrooms, plus any structural improvements, like remodeled rooms or additions, are critical factors. Amenities are another consideration—is there a swimming pool on the property or a boat dock? Features such as hardwood floors or majestic views also influence value.

The purchase price of comparable properties within a given radius is a crucial component. These prices demonstrate what the market is willing to pay for a home similar to the one being appraised and generally carries the most weight.

Because the home will be used as collateral for the mortgage loan, the lender needs to be assured that the money loaned doesn’t exceed the home’s value, should the buyer default. The lender will typically order the appraisal, but the appraisal cost is paid by the buyer (generally between $300-$400).

The appraiser will visit the home and visually inspect the interior and exterior. They’ll take measurements and note any conditions that might positively or adversely affect the property value. The appraiser will also research recent home sales in the areas and deliver a final appraisal report that includes an opinion of value.

What if the appraisal is lower than the sale price?

If the appraisal value is lower than the sale price, you’ve reached a fork in the road. The mortgage lender is unwilling to approve a loan for more money than the home is worth. You can use a low appraisal to encourage the seller to lower the home’s price, or you can choose to make a larger down payment. With a larger down payment, the amount you need to borrow will be less than the appraised value.

If you feel the appraiser understated the value, you could challenge the estimation or get a second opinion. Sometimes home values lower due to foreclosures or short sales in the area. You may convince your appraiser that this was the case with some of the comparable properties while at the same time, proving that your home is in significantly better condition than those that were sold at a discount.

What if the appraisal is higher than the sale price?

If the appraisal value is higher than the sale price, this transaction can keep moving along as planned. The expert opinion of the appraiser is that the value of your soon-to-be new home is higher than what you’ve agreed to pay. Congratulations—you already have equity in your new home!

The value of an appraisal

The appraisal process isn’t meant to put a roadblock between you and your dream home—it’s there to protect you and the lender. You don’t want to unknowingly overpay for a home, especially if you need to sell it in the short term. It could be worth less than you owe, and that’s an unfortunate situation for everyone. From the bank’s perspective, they don’t want to own a house they can’t sell to cover the outstanding loan balance in case of a loan default.

In the home-buying process, the appraisal is just one of many things that need to occur to get to the closing table. Regardless of whether your appraisal comes in high or low, understanding the process is your best defense to managing the hurdles until you get to your home sweet home.

Have questions about buying a home? We’re here to help!