Is it safe to use Venmo, Zelle or CashApp?

If you’ve ever needed to send money digitally, you’ve probably heard of payment services like Zelle, Paypal, CashApp or Venmo. Today, 60% of Americans use so-called “peer-to-peer” or P2P services. The basic idea is that these services allow people to easily send money to each other without the need to go through a bank or write a check.

But with the extreme convenience of these services can also come downsides. Here’s how you can understand and mitigate the risks of P2P payment services. 

Are payment apps safe? 

P2P services vary in their exact methods. For example, Zelle allows for direct transfers between bank accounts, while apps like Venmo create a “digital wallet” for users where the money goes to and from bank accounts or credit cards (for an additional fee.) While it’s difficult to generalize, P2P platforms tend to share similar risks. 

P2P providers tend to be vulnerable to data breaches and cyber attacks. In January 2024, 26 billion records, including those of millions of Venmo users, were exposed to hackers, in the so-called “mother of all breaches.” Venmo users had their data exposed to hackers, one of the biggest data breaches on record. That same year, a data breach at Cash App affected more than 8 million users. 

In short, you cannot be certain that your personal and banking information will remain safe if you use a P2P payment system. 

The risk of scams on payment apps 

Even if P2P payment systems were 100% immune to data breaches and hacks (which they aren’t,) that wouldn’t be the end of the risk. It doesn’t matter how secure a payment system is if you give money to a person voluntarily, only to discover later that they were actually a scammer. 

Scams are the biggest risk in P2P platforms. They can take a wide range of forms, from fake investment schemes to tricks asking you to pay back an “accidental” money transfer. Over time, scams are growing far more common and sophisticated.

And the sums stolen through P2P apps can be very large. About 17% of P2P users have been targeted with scams on those platforms, according to a recent study, and a fifth of scam victims reported losing more than $5,000. 

And if you lose money to a P2P scam, it’s very possible that you’ll never see that money again. Zelle has been sued by the government over some banks’ alleged refusal to compensate fraud victims. According to one congressional investigation, only 12% of victims ever get their money back. 

Because transactions happen so quickly — often in just a few seconds — scammers often use urgency as a way to compel people to send money before they think better of it. 

Avoiding mistakes on peer-to-peer payment platforms 

Even if there’s no foul play involved, one of the biggest problems with services like Venmo, Paypal and Zelle is that it’s very easy to make mistakes. Because you’re sending money to a username or a phone number, a single misplaced letter or number could send the money to the wrong person. 

And because these payment services are less regulated than more formal payment methods, you can’t count on getting your money back in the case of error. 

To avoid making a mistake like that, the best thing you can do is double check that you’re sending money to the correct person. The exact way that you can protect yourself from accidental transactions varies by the company: 

• On Venmo, you are given the option to confirm the last four digits of the recipient’s phone number to make sure that you are sending the money to the right person. Always confirm this. 
• On Cash App, you should use the security lock feature, which requires you to verify certain information about yourself before sending money. This both prevents scams and makes it more difficult to send money accidentally. You may be asked to provide your date of birth and last four digits of your Social Security number.
• In addition to its confirmation features, Paypal enables people to put together a favorites list of trusted contacts like friends and family. That makes it more difficult for other people to impersonate these contacts, and easier to be confident that you’re sending money to the right person. 
• Zelle offers relatively few verification features, and only requires an email address or phone number to send money. Therefore, you have to be even more careful than usual when sending money on Zelle. In addition, Zelle is automatically built into the vast majority of accounts at banks and credit unions. So your bank account may have access to Zelle and you don’t even know it and you can’t opt out. 

At the end of the day, more convenience almost always comes at a cost. We advise you to use these services carefully, and to consult PIRG’s consumer guides for additional information. 

New policy might make payment apps more costly and less safe 

In May, Congress overturned new oversight of payment apps like Venmo. This means there will be insufficient oversight to ensure large payment apps comply with privacy protections and uphold consumers’ rights to dispute incorrect or fraudulent charges. Because of this and other risks, P2P payment apps have some downsides that other forms of payment don’t. 

PIRG will continue to advocate for the rights of consumers who use P2P platforms, but we advise these people to be very careful with both their data and their transactions. 

You can help stand up for consumer advocacy by donating to PIRG today.