The best way to avoid fraud on PhonePe is to avoid PhonePe. PhonePe – and all A2A Real Time Payments like UPI (India), FPS (UK), Zelle / Venmo (USA) – are highly prone to fraud by design and have very little redressal in the event of fraud.
Pay with credit card instead. By doing that, you can protect yourselves even in the worst case fraud scenario. Credit card is a revocable method of payment. If you don’t get the ordered goods or they don’t work as advertised, you can dispute the charge and eventually get it reversed. On the other hand, Account-to-Account Real Time Payments like UPI are irrevocable. If you pay with them, your money is lost forever in the event of fraud.
If, for whatever reason, you can’t / won’t use a credit card, one or more of the first nine suggestions in Ten Ways To Protect Yourselves From Fraud can be of use to protect yourselves against fraud.