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PayPal Adds Scam Detection to Friends and Family Payments

DATE POSTED:July 21, 2025

PayPal has introduced a scam prevention tool for PayPal and Venmo Friends and Family payments.

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“Designed to proactively alert customers to potential scams and prevent losses in real-time, the alerts intervene when it matters most — before any funds are sent,” the company said in a Monday (July 21) news release.

“As scammers attempt to coerce people into sending payments that may not be eligible for refunds, including scams that originate on social media, we believe putting more information directly into customers’ hands will empower them to help stop scams in their tracks.”

According to the release, the system was designed to provide fraud mitigation and an improved user experience. The alerts appear when the system detects a possible scam, sharing information about the likelihood of fraud at the point of payments.

The alerts can learn and adapt to scam tactics as they evolve, employing artificial intelligence (AI) models that analyze billions of data points and update when patterns change.

“This means our system can help more quickly detect a potential new scam, even if we have never seen that specific scam before,” PayPal said.

Research by PYMNTS Intelligence has shown the widespread nature of financial scams. Roughly 30% of Americans — around 77 million people — have lost money to a scam in the last five years, according to the report “How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities,” created in collaboration with Featurespace.

“This highlights the pervasiveness of these crimes, with most victims losing more than $500, and many experiencing even more significant financial losses,” PYMNTS wrote.

“The report also shows how scams affect individuals across various demographics, including age, education and income. While scams like job search fraud tend to target younger consumers, older generations are more vulnerable to eCommerce scams.”

For example, baby boomers and seniors were three times more likely to be taken in by phony online shopping schemes than Gen Z. These variations in scam susceptibility show how scammers alter their approaches to different groups based on their needs and situations.

A major factor in the increase of scams is the way scammers personalize their approach according to the victim’s lifestyle and characteristics. This personalization makes scams seem more legitimate and tougher to spot.

“Consider 21% of Gen Z consumers reported falling for scams initiated through social media platforms, reflecting their heavy digital presence,” PYMNTS wrote. “Older generations like boomers are more frequently contacted via email or phone calls, methods they trust more. Scammers often adapt to these preferences, using channels that are most likely to engage specific age groups.”

The post PayPal Adds Scam Detection to Friends and Family Payments appeared first on PYMNTS.com.