Complaints against some digital payment services and apps like, Cash App, or Cell are soaring, according to a disturbing new report.
Non-Profit Research Group of Public Interest in the United States [PIRG] Major issues include fraud, problems using accounts, and poor customer service. The group analyzed more than 9,200 complaints filed with the Consumer Financial Protection Bureau from 2017 to April 2021.
The report found that more than 2,700 complaints were filed from January to April this year – compared with just over 600 in the same period last year.
Around four out of five Americans use mobile payment apps.
One of them is Luke Krafka, a professional cellist from Long Island,. Krafka often plays in concerts with rotating musicians who are usually paid for in cash – and he says mobile pay apps made this task a lot easier.
“Paypal, Venmo, Cash-App, yes. There is no paper, no checks, no waiting,” he told the CBS News Consumer Investigative Correspondence Anna Werner. “You get paid instantly, go to your bank account.”
In October 2019 a new customer got in touch to hire him for a wedding.
“It was a normal wedding. And I reached out to my friends who are good for the gig, ”he said.
The customer told him he would send a check for about $ 1,000 for Krafka and another $ 950 to pay for the customer’s “Sound Man” – which he then asked from Krafka via a mobile payment app.
“I said, ‘Look, if you send me the money, it’s not a problem, that’s fine,'” Krafka remembers.
Mobile payment apps allow users to pay others instantly, viaor credit cards connected to the app.
Their simplicity is usually a good thing, but not always, as Krafka found out after depositing the wedding clients’ check for $ 1,960.
“I checked the next day and the full amount was in my bank account,” he said.
Then, as requested, he sent the customer’s “soundman” $ 950 via the cell payment app.
“I think it was the next day that the check broke,” he said. “And when that happened, I slowly started putting it all together.”
The people who supposedly hired him stopped answering his calls – and he’d lost the $ 950.
“I said I think I was betrayed,” said Krafka.
PIRG’s report addressed over 9,000 complaints to federal regulators about digital wallets and payment apps, including PayPal, Venmo, CashApp, and Cell.
They found that those filed between January and April this year were more than 300% higher than the same period last year – with many losing money to fraud or fraud.
“If it’s a scammer, he won’t come back,” said Ed Mierzwinski, who oversees the PIRG’s federal consumer program.
Unlike credit or even debit cards, app transactions are instant, Mierzwinski said.
“There are no rules that protect you very well when your money goes from your account to someone else’s account,” he said.
It is especially difficult when the betrayed user initiated the transaction.
Krafka said he reached out to his bank to get the money back but was told they couldn’t help him.
“I was surprised that there was no legal recourse and that when it is finished it is finished and there is nothing more to be done,” said the professional musician.
Cell did not want to comment on Krafka’s case, but said his top priority was “protecting consumers from fraud and fraud”. The company offers a comprehensive list of recommendations on the website so that consumers can protect themselves.
Cash App has a consumer help center online and on their mobile app as well as a 7 day one Customer service phone number, and encourages people, “If you think you may have been a victim of fraud, contact Cash App Support immediately through the app or website.” They also offer articles about recognize and avoid Scam on their website.
Venmo and Paypal are challenging consumers who think they did fallen victim to fraud to “contact customer service directly”. They provide resources on what to look for and how to report it on your website.
“We also recommend that customers get in touch firstname.lastname@example.org to share information about suspected spam. Our dedicated security team will review the information and take action if necessary, “the company website says.
All of the app companies told CBS News that they are working to stop bad actors and have processes in place to spot scams. They also warn consumers to be vigilant and only send money to people they know – not strangers.