The burgeoning peer-to-peer mobile payments space could be full of unforeseen problems, even between Facebook “friends.”
For example, points out Consumer Reports, what if your buddy sends you money to cover his share of dinner or money he owes you — but he didn’t have money to cover the payment? And the payer’s debit card provider charges a fee or overdraft penalty to cover the shortfall.
Can the recipient friend be on the hook for the money? Apparently, yes.
In March, Facebook announced that its messaging app now includes a new service, Facebook Payments, enabling users to send money instantly to their friends after registering a bank-issued Visa or MasterCard debit card. Given Facebook’s dominance in social media, the new service is a big move in the growing peer-to-peer payments market.
“Once you add a debit card, you can create a PIN to provide additional security the next time you send money,” Facebook said at the time. “On iOS (Apple) devices. you can also enable Touch ID. As always, you can add another layer of authentication to your account at any time.” In other words, Facebook makes sure the transaction is as secure as possible.
But Consumer Reports is cautioning users to carefully review Facebook’s Payment Terms for Person-to-Person Transfers (https://www.facebook.com/payments_terms), which essentially says that you might be on the hook for your Facebook friend’s mistake, and possibly even for fees and other hassles that you might not expect.
Facebook’s Payment Terms say, for example, “If you receive and accept a P2P transfer you are liable to us for not only the payment but also any fees that may result from a later invalidation of that payment for any reason, including without limitation if you lose a claim or a chargeback, or if the payment is reversed.”
According to their terms, you could be sued to recovery funds: “You agree to allow us to recover any amounts due to us by debiting from your electronic value balance. If your electronic value balance is insufficient to cover this amount, we reserve the right to charge your funding instrument or take any other legal action to collect the funds to the full extent allowed by applicable law.”