Payments Apps Are Sparking More Complaints From Military Personnel, the CFPB Says

Members of the U.S. military are reporting problems with digital payments apps more frequently than the general population, and peer-to-peer payment apps account for more of those complaints than any other type of payments technology, according to data released Tuesday by the Consumer Financial Protection Bureau.

The CFPB reported receiving, and forwarding to companies involved, 1,118 complaints related to payments apps in 2022 from members of the military—many related to fraud or scams—or 2.2% of all complaints received from servicemen and -women. From the general population, the agency forwarded 819,570 complaints, of which 1.5% were related to payments apps.

That total of 1,118 for last year also represents a 42% rise from 2021 and a 76% jump from 2020, according to the CFPB’s figures. Of that 2022 total, so-called money-transfer apps account for nearly half of the digital-app complaints. “Many of the reported issues and complaints about digital payment apps relate to frauds and scams, suggesting it is a rapidly growing financial threat to military families,” the agency says in its report.

The problems with payments apps in the military—and peer-to-peer apps in particular—come as Congress and the payments industry focus on scams in the general population. Last week, four U.S. Senators sent letters to Venmo and Cash App requesting information about the apps’ rates of fraud and scams. Venmo, which is part of PayPal, and Cash App, part of Block Inc., have until June 30 to respond. Last year, some of the same Senators launched an investigation of Zelle, a P2P payments app operated by bank-owned Early Warning Services LLC, in a move also related to concerns about scams.

Scams are seen as efforts by criminals to trick app users into transferring funds to accounts controlled by the scam organizers. In this sense, the transfers are authorized by users even though they are induced by operators of the scam.

Now, according to the CFPB’s data, it appears members of the military are more likely than the general population to fall victim to these scams. “Some servicemembers have … indicated in their complaints about incurring serious financial harm from scams and fraud when using these services, and their complaints suggest digital payment app providers often fail to provide timely and substantive resolutions,” the CFPB said Tuesday in a statement about its report.

The CFPB reports on service members’ experiences as part of its Office of Servicemembers Affairs, created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.