Danny Katz
Executive Director, CoPIRG
Executive Director, CoPIRG
CoPIRG Foundation
DENVER — Consumer complaints about peer-to-peer (P2P) payment apps such as PayPal, Venmo and Square have surged during the pandemic year. In April, there were 970 digital wallet complaints — almost double the previous monthly high from July 2020. CoPIRG Foundation analyzed this growing problem for Virtual Wallets, Real Complaints, a new analysis of the Consumer Financial Protection Bureau’s (CFPB’s) Consumer Complaint Database.
“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 Danny Katz, CoPIRG Foundation Executive Director. “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 three most commonly complained-about issues in the CoPIRG Foundation report are problems managing, opening or closing accounts; problems with fraud or scams; and problems with transactions (including unauthorized transactions).
The report found that the top 10 most-complained-about companies accounted for 90 percent of all 9,277 digital wallet complaints, led by PayPal (which also owns the Venmo app), Square (which owns Cash App) and Coinbase, a cryptocurrency trading platform. Americans also complained a lot about several big banks, including PNC Bank, Chase, and Bank of America, (which are some of the co-owners of Early Warning Systems, the parent of Zelle, a leading P2P app).
When you use a peer-to-peer payment (P2P) app, you have fewer rights by law and more threats from scammers. Our recommendations:
“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 Katz. “Consumers don’t realize these online transfer payments are instantaneous and treated like cash, so when fraud strikes, you’re likely without recourse.”