Media Room
YONKERS, NY – A new Consumer Reports evaluation of popular peer-to-peer (P2P) payment apps found that users could lose money to fraud or scams and face privacy risks because app providers may share their personal information widely and it is difficult for users to delete their data. CR is calling on P2P payment providers to strengthen their consumer disclosures and app features and is offering tips to users to help avoid problems.
“Peer-to-peer payment apps are a convenient and easy way to send money to others with just a few taps on your phone,” said Delicia Hand, director of financial fairness for Consumer Reports. “But consumers may end up losing money if they send a payment to the wrong person or fall victim to fraud or scams and are putting their privacy at risk when using a P2P payment app.”
Consumer Reports evaluated P2P payment apps using its Fair Digital Finance Framework, which CR developed to examine the benefits of digital finance products and services and the potential risks they may pose for consumers. The Framework was created with input from academics, fintech companies, regulators and consumer advocates to identify consumer friendly practices, improve industry practices and spur policymakers to adopt needed safeguards.
Recent surveys by Consumer Reports have documented how widely P2P payment services are used in the U.S. Well over half of Americans (64 percent) use a P2P payment app for payments to and from individuals, including four out of five (81 percent) of the 18 to 29 age group, according to a March 2022 nationally representative CR survey of 2,116 U.S. adults. Two out of five Americans (40 percent) say they use P2P payment services at least once a month; nearly one in five (18 percent) use them at least once a week.
While P2P payment apps have proven popular, users can lose money when they accidentally make an erroneous payment or fall victim to fraud or scams. CR’s survey found that of those who use P2P payment services at least once per week, 12 percent had sent money to the wrong person and 9 percent had been the victim of a scam.
In August through October 2022, CR examined Apple Cash, Cash App, Venmo and Zelle, and focused on the app providers’ safety, privacy and transparency policies, practices and protections by examining publicly available documents found on company websites and apps. CR evaluated safety practices related to the technology and policies used by the companies to protect consumer data and funds; privacy practices related to user data collection, sharing, and deletion; and transparency practices related to company disclosures of legal terms and consumer rights. Consumer disclosures were often difficult to find and understand, raising broad concerns about transparency. CR found that:
CR has urged policymakers to strengthen consumer protections for P2P payment app users, but is calling on providers not to wait for regulators to act. “P2P payment providers can raise the bar for consumer protection by taking more aggressive steps to minimize user risks,” said Hand. “Adopting stronger policies and safeguards will help build customer trust and loyalty and establish a new industry standard for fair digital finance.” CR recommends that providers:
CR recommends a number of steps consumers can take to help minimize potential risks:
Consumer Reports’ assessment of peer-to-peer payment apps is part of a broader initiative to strengthen consumer protections in the burgeoning digital finance marketplace, made possible, in part, by a grant from Flourish Ventures’ fund at the Silicon Valley Community Foundation. The grant supports CR’s efforts to partner with consumers, industry, and policymakers to secure business practices, standards, and laws necessary to build a fair and inclusive financial marketplace.
Founded in 1936, CR has a mission to create a fair and just marketplace for all. Widely known for our rigorous research and testing of products and services, we also survey millions of consumers each year, report extensively on marketplace issues, and advocate for consumer rights and protections around safety as well as digital rights, financial fairness, and sustainability. CR is independent and nonprofit.
© 2024 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent, nonprofit organization whose mission is to work side by side with consumers to create a fairer, safer, and healthier world. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports® magazine, ConsumerReports.org® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our prior written permission. Consumer Reports will take all steps open to it to prevent unauthorized commercial use of its content and trademarks.