Details of an analysis revealed this week by the United States Public Interest Research Group USPIRG) show complaints about peer-to-peer payment apps have grown during the COVID-19 pandemic. Virtual Wallets, Real Complaints analyzed data from the Consumer Financial Protection Bureau’s (CFPB’s) Consumer Complaint Database.
In April 970 complaints about digital wallets were filed, almost double the previous monthly record achieved in July, 2020. The growth in complaints should not be a surprise, given the increased use of such systems during the pandemic, a USPIRG official said.
“People use peer-to-peer apps for convenience but there’s nothing more inconvenient than having your money inaccessible — or even worse, going to the wrong person,” said Ed Mierzwinski, PIRG Education Fund’s senior director of federal consumer programs. “We’re seeing as more people turn to payment apps, more people are getting burned by related problems, including scams and fraud. And, more people are experiencing problems bad enough that they’ll go to a government website to register their complaints. It’s time for the CFPB to force the payment apps to provide better customer service.”
The most popular issues were account management trouble, frauds and scams, and transaction irregularities such as unauthorized ones. Ten companies accounted for 90 percent of the 9,277 digital wallet complaints, including PayPal, Square, Coinbase, Venmo, Zelle, Cash App, PNC Bank, Chase, and Bank of America.
The USPIRG said P2P apps leave users with fewer legal rights and more threats from scammers. They recommend only using the apps with trusted entities, not linking the P2P account to all of your funds, and ensuring security settings are “most private” (the default is often “most public”). If you wish to send money to someone unfamiliar to you, either send $1 as a trial or ask the person to first send a request.
“Don’t use these apps to pay people you don’t know and, even if it’s your best friend or your mom, confirm you’re set up correctly and using the right user name,” said Mierzwinski. “Consumers don’t realize these online transfer payments are instantaneous and treated like cash, so when fraud strikes, you’re likely without recourse.”