Virtual Wallets, Real Complaints

How Digital payment apps put consumers' cash at risk

New report documents consumer complaints to the CFPB about digital wallets and peer-to-peer (P2P) apps.


Consumers are increasingly using digital payment apps — Venmo, Cash App and Zelle are a few —  for convenience. A 2020 Nerdwallet survey found that “[r]oughly 4 in 5 Americans (79%) use mobile payment apps.” The apps were originally marketed as a way for friends to split expenses. However, the ease of opening peer-to-peer (P2P) accounts, the ease of obtaining information about other users and a variety of ways to trick consumers have created new fraud risks to users.

The use of payment apps has been driven higher over the last year, as the pandemic has also led more people to use “contactless” transactions, in which a consumer taps a phone or payment card to a payment terminal, rather than using cash.

Digital app payments are generally “instantaneous” and the app companies generally take the position that transactions are not reversible. Customer service for payment apps is minimal, sometimes lacking contact phone numbers or human interaction at all. In the absence of regulatory action, customer service improvements or security features appear to ratchet up only in response to reputational threats. 

For example, despite complaints from privacy experts over the years, the Venmo app gave consumers the right to hide their friend lists only after President Joe Biden’s network of contacts, including his grandchildren and other family members, was exposed by an investigative reporting site.[8] The default, however, is that the friend list is “public.”

This report examines complaints to the Consumer Financial Protection Bureau since the CFPB began collecting them in the “mobile or digital wallet” category four years ago. The report also makes recommendations to consumers and to policymakers to help consumers keep their money safe.

Digital wallet complaints are on the rise

Digital Wallet Complaints Skyrocket

The CFPB received 9,277 complaints in the product category of “mobile or digital wallet” since it began accepting such complaints in 2017, through April of 2021. The CFPB includes complaints about peer-to-peer (P2P) payment apps in the digital wallet category.

Complaint volume has steadily increased over time. In the first year of accepting complaints, the CFPB received slightly more than 1,000 complaints about digital wallets. Over the year preceding April 2021, the CFPB received more than 5,200 complaints. And in April 2021, there were 970 digital wallet complaints — almost double the previous complaint peak in July 2020.

The three most common complaints involving digital wallets are problems managing, opening or closing accounts; problems with fraud or scams; and problems with transactions (including unauthorized transactions).