Tags: venmo | paypal | cashapp | money payment apps | cybersecurity

Money in Venmo, PayPal, CashApp Could Be Unsafe

Money in Venmo, PayPal, CashApp Could Be Unsafe
(AP)

Thursday, 01 June 2023 03:57 PM EDT

Customers of Venmo, PayPal and CashApp should not store their money for the long term with these apps because their funds might not be safe during a crisis, the Consumer Financial Protection Bureau warned Thursday.

The alert comes several weeks after the failure of Silicon Valley Bank, Signature Bank and First Republic Bank, which all experienced bank runs after fearful customers with uninsured deposits pulled their money en masse.

The Federal Deposit Insurance Corporation insures bank accounts up to $250,000. But money stored in Venmo or CashApp or Apple Pay Cash is not being held in a traditional bank account. So, if there is an event similar to a bank run with these payment apps, those funds may not be protected.

Some of these funds may be eligible for pass-through insurance coverage if the customers do certain activities with the apps, the CFPB says, but generally by default these apps are not covered by deposit insurance.

“We find that stored funds can be at risk of loss in the event of financial distress or failure of the entity operating the nonbank payment platform, and often are not placed in an account at a bank or credit union and lack individual deposit insurance coverage,” the CFPB said in its report.

“Consumers may not fully appreciate when, or under what conditions, they would be protected by deposit insurance,” the agency added in its report.

Peer-to-Peer payment apps and non-banks offering bank-like services have exploded in popularity in the last decade. Venmo now has more than 90 million customers and recently announced it was going to allow parents to create accounts for their teenage children, potentially bringing in tens of millions more customers for the app.

Apple recently announced a savings account tied to its Apple Card that is operated by Goldman Sachs. The savings account took in billions of dollars in deposits within days of its launch.

PayPal, which owns Venmo, as well as Apple Inc. and Square, owner of CashApp, did not immediately respond to requests for comment.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


StreetTalk
Customers of Venmo, PayPal and CashApp should not store their money for the long term with these apps because their funds might not be safe during a crisis, the Consumer Financial Protection Bureau warned Thursday.
venmo, paypal, cashapp, money payment apps, cybersecurity
337
2023-57-01
Thursday, 01 June 2023 03:57 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved