Consumer Reports calls on payment app providers to adopt stronger protections for consumers tricked into sending money to crooks
WASHINGTON D.C. – Consumer Reports applauded the Consumer Financial Protection Bureau today for ordering the operator of Cash App to pay $175 million and adopt a number of measures to improve the way it handles fraudulent transactions reported by consumers. CR praised the action in light of its own investigation, which found weaknesses with how Cash App and other peer-to-peer payment apps handle disputes over fraud.
“The rapid growth of payment apps like Cash App has opened the door to a new wave of sophisticated scams, resulting in hundreds of millions of dollars in losses for consumers every year,” said Delicia Hand, director of the digital marketplace at Consumer Reports. “Unfortunately, most scam victims discover that payment providers rarely provide relief and they have little recourse when they are tricked into sending money to crooks.”
Hand continued, “Cash App’s track record on fraud is particularly troubling given how it failed to adequately investigate scams and discouraged customers from seeking relief. We applaud the CFPB for taking action to protect Cash App scam victims and call on all payment app providers to adopt stronger policies to ensure consumers are treated fairly when they fall victim to fraud.”
In 2022, CR conducted a comparative evaluation of four leading P2P payment apps – Apple Cash, Cash App, Venmo and Zelle – and found that policies for resolving fraud and errors can leave consumers at risk of losing their money. In 2024, CR took another look at the user-facing policies of these same four providers plus the seven banks that operate Zelle and found that few improvements had been made. Most of the companies, including Cash App, have vague or no reference to how certain fraudulently-induced payments (scams) are not considered unauthorized, making consumers ineligible for getting reimbursed for their losses.
CR’s research has documented the alarmingly high incidence of fraud and scams on P2P platforms. A CR nationally representative survey of 2,032 U.S. adults in June 2024 found that 17 percent of weekly P2P users said they had sent money to the wrong person, while 12 percent said they had been scammed. In 2023 alone, consumers reported losing $210 million to scams on these platforms, a staggering 62 percent increase from 2021.
CR has called on P2P providers to adopt a number of measures to better respond to fraud on their platforms, including:
- Create a streamlined, centralized process for consumers to report fraud and seek reimbursement
- Adopt and publish a clear, enforceable policy guaranteeing reimbursement for all unauthorized transactions, as well as authorized transactions induced by fraud
- Implement stronger transaction monitoring and identity verification safeguards
- Provide greater transparency about fraud trends and reimbursement rates
- Establish a robust framework for sharing fraud information across the industry
Contact: Michael McCauley, michael.mccauley@consumer.org