Beware potential problems with Facebook's new person-to-person payments

In March, Facebook announced the launch of a payments feature for its Messenger application. It allows users to send each other money with just a message, just like this image from Facebook’s press release about this new service.

In order for the transaction to go through, of course, you have to have money available to send or an account available to receive it. That means that you have to give Facebook your debit card information. Here’s how the Facebook press release explains it: “The first time you send or receive money in Messenger, you’ll need to add a Visa or MasterCard debit card issued by a US bank to your account. Once you add a debit card, you can create a PIN to provide additional security the next time you send money. On iOS devices you can also enable Touch ID. As always, you can add another layer of authentication to your account at any time.”

Find out why Apple Pay virtual wallet looks like an also-ran.

But we were wondering, what happens if things don’t work out with a payment? Let’s say your buddy sends you money to cover his share of dinner, but—oops!—he didn’t have enough money to cover it. Well, Facebook’s Payment Terms for Person-to-Person Transfers (we found them here: https://www.facebook.com/payments_terms) say that you might be on the hook for your buddy’s mistake and maybe 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, they can come after you: “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.”

In case you think that the headline here is an exaggeration, Facebook’s Payment Terms spell it out: “P2P use is at your sole risk and we assume no responsibility for the underlying transaction of funds, or the actions or identity of any transfer recipient or sender. Disputes regarding funds are between you and the sender of a payment. If a sender files a claim for a chargeback after a P2P transaction, we are not responsible for determining the veracity of claims or the disposition of the payment.” In other words, you’re on the hook for the company that you keep. (Choose your Facebook friends wisely!)

Finally, look out for fees. Here’s this from the Payment Terms: “Use of P2P may subject you to fees including without limitation those from third parties, such as reversal charges or other fees for insufficient funds if your attempted payment is rejected.”

—Christina Tetreault

A version of this article previously appeared in the Consumer's Union website Defend Your Dollars.

More from Consumer Reports:
Best cars for making it to 200,000 miles
Dos and don’ts of itemized tax deductions
Why you should wait to buy a laptop

Consumer Reports has no relationship with any advertisers on this website. Copyright © 2006-2015 Consumers Union of U.S.