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How to Spot and Avoid P2P Scams and Fraud

2022-11-02

Main Takeaways

  • User protection being Binance’s utmost priority, we’ve implemented complex and robust security measures across our ecosystem. Still, the first line of defense against fraud and scams is the user themselves. When you trade peer-to-peer, it is important to be aware of the most common scam tactics to be able to recognize them.

  • Don’t mark the trade as complete before you’ve made sure to check your account or crypto wallet and confirm that you’ve received the funds that are supposed to come your way from a P2P trade. 

  • Always take screenshots of all your transactions as proof that they were completed. And don’t hesitate to report any suspicious behavior.

Keep on reading to learn how to spot common scam and fraud schemes on P2P marketplaces to always trade safely and securely.

Peer-to-peer (P2P) trading lets users buy and sell crypto directly between each other using their preferred payment methods and currencies. Historically, P2P trading was one of the first ways people could trade crypto before first centralized exchanges emerged.

Trusted by millions of users worldwide, Binance P2P offers the best liquidity, top-of-the-line security, and access to over 700 payment methods and 100 fiat currencies. While older P2P exchanges came with higher risks of thefts and scams, many current P2P trading platforms have greatly improved their security compared to earlier versions. For example, Binance P2P has implemented an escrow service, regular security updates, a stringent identity verification process, among other measures to keep users safe. However, even with robust safeguards in place, all trading activity comes with risks, and P2P is no exception. 

What Are Some Common P2P Fraud and Scams? 

While user safety is Binance’s priority, it’s always worth being vigilant. The best protection for users of any P2P trading platform is to be aware of the most common scam tactics, so that you can better equip yourself to avoid them. Below are some common P2P scams you should be aware of.

Fake customer representative 

Fake technical support messages are a common scam in the crypto and NFT space. For example, if you’re having technical difficulties on an established P2P platform and ask for assistance on a social media platform, a scammer might claim to represent the P2P exchange and offer their help. The fake customer support agent can then redirect you to a site that looks identical to the genuine one, and convince you to enter your account details or crypto wallet credentials, leaving them vulnerable to theft. 

To avoid falling for such scams, only seek assistance from the official P2P exchange and double-check the website domain. Some scammers may send you fake security alerts regarding your account via email or text message, but the tactics are the same. Don’t click on unknown links before you have verified the source.  

Fake receipt scams

It’s also essential to closely check the information sent to you by the counterparty when engaging in a P2P trade. Scammers can digitally manipulate screenshots and claim they’ve completed their part of the deal – pressuring you to do the same. Once you comply with the scammer's demands without actually checking if you’ve received the funds they had supposedly sent, you will likely lose your money with slim chances of getting anything in return.

To avoid falling for a fake receipt scam, always make sure to carefully check your bank account or crypto wallet to confirm that you’ve indeed received the funds that are supposed to come your way from a P2P trade. Only then release the funds. Never release funds based on receipts only. 

Wrong transfer scams

Sometimes a scammer may attempt to void the P2P transaction after it’s been completed. The scammer might call their bank to cancel the transaction by claiming that the transfer amount is wrong or that their account was hacked. In this scenario, not only does the seller lose their funds after releasing the crypto, but they can also be threatened to not report the canceled transaction to the authorities. 

To combat this kind of scam, don’t be intimidated by these scare tactics and calmly gather evidence, such as screenshots, of your correspondence and transaction with the criminal. 

Chargeback fraud 

Fraudsters can also take advantage of the chargeback feature with the banks on P2P platforms. Once the P2P transaction is completed, the criminal will file a chargeback request and report that they’ve never authorized the fund transfer. They may even claim that the transaction was fraudulent or made by mistake, so that the initial payment gets reversed. Much like fake receipt scams, this happens if the seller rushes to approve the transaction without checking if the funds are already in their account. 

To avoid this kind of scam, make it a habit to keep screenshots of your transactions as evidence that they were completed. This will make the appeal process much smoother when you reach out to customer service to combat the scammer’s chargeback attempts. 

Cheque scams 

Bad actors can try sending payments with a bounced cheque – one that can’t be cashed due to insufficient funds on the associated account – or simply cancel the cheque after invoicing. To protect our users, Binance P2P doesn’t support cheques as a payment method, because such transactions can be associated with increased risks and uncertainty. Hence, users should never accept any payment via cheque, and also be extra vigilant to make sure that your counterparty doesn’t send you a cheque instead of the payment method mentioned on the advertisement.
To learn more about cheque scams and how to avoid falling for them, check out our guide P2P Trading: How to Avoid Cheque Scams

How to Protect Yourself From P2P Fraud and Scams 

Now that we’ve covered some of the more common P2P scams, here are a few tips you can follow to better protect yourself while trading peer-to-peer. 

Take screenshots

Make it a habit to take screenshots of all your transactions as proof that they were completed. In the event of having been scammed, screenshots act as primary evidence and can help make your case with the P2P platform when you file an appeal. 

Trade on reputable platforms 

You would do well to only use reputable P2P exchanges like Binance P2P where users have to go through an identity verification process before they’re allowed to trade. This significantly reduces your risk of transacting with a fake account or someone with a stolen identity. 

Moreover, Binance P2P has an escrow service in place that holds the crypto funds while the transaction is pending. This mechanism is designed to prevent theft or scams by adding an additional layer of trust and preventing bad actors from running away with your money without honoring their part of the trade. 

Double-check transactions

Don’t authorize any transfer until you are certain that you’ve received the money on your end. Always double-check your account to confirm that your transaction has been successfully completed. More importantly, don’t rely on your counterparty for proof as there is always a possibility that they may send over doctored evidence of payment. 

Stick to on-platform communication

If possible, limit all communication with your counterparty to the P2P platform where you are transacting. Communicating using outside channels will make it easier for a scammer to raise a false dispute against you and deny the transaction ever happened.  

Reach out to customer support 

If you’re unable to resolve an issue with your counterparty amicably, contact customer support for assistance. On Binance P2P, the customer support team will offer prompt responses to help solve any issue that you may face while using the platform.

To learn more about protecting yourself from P2P fraud and scams, check out our guide 6 Bitcoin Scams To Avoid When Using P2P

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Disclaimer: Your use of Binance P2P services and all information and other content (including that of third parties) included in or accessible from Binance P2P services is at your sole risk. Our only responsibility is to handle crypto transactions. All payments are final upon completion unless otherwise required by law. The Binance P2P platform has neither the right nor obligation to resolve any disputes arising from a completed payment. Neither the Binance P2P platform nor its merchants shall be responsible for any loss after a completed payment.