Consumer complaints about mobile payment applications and digital wallets are on the rise as more Americans abandon cash in favor of digital payment technologies, according to a new survey from the US Public Interest Research Group. Since April 2017, when it first began taking complaints about “mobile or digital wallets,” the Consumer Financial Protection Bureau (CFPB) has received 9,277 such complaints. In the first year, the CFPB received just over 1,000 complaints, and in the year leading up to April 2021, the CFPB processed more than 5,200. According to the data, 970 digital wallet complaints were filed in April of this year, roughly doubling the previous peak in July 2020. The investigation looked into concerns about third-party digital wallets accessing bank accounts or complaints about corporations’ digital wallet products. The majority of complaints are directed at a few platforms, with two-thirds of them focusing on just three companies: PayPal (owner of Venmo), Square (owner of Cash App), and Coinbase. Paypal, which operates both the Paypal service and the digital wallet platform Venmo, has received the most complaints of any company, which is unsurprising considering its massive user base. It was the subject of 4,431 complaints between April 2017 and April 2021, the most of them were about maintaining, opening, or deleting a mobile wallet account, as well as accessing funds.
Square, which was created by Twitter CEO Jack Dorsey, is ranked second on the list with 1,202 complaints, with illegal transactions being the most common concern. Coinbase is ranked third and is known for its digital wallet service that allows users to purchase and trade bitcoins. It was the subject of 755 digital wallet complaints, with the most common issue being the inability to open, close, or manage a mobile wallet account. Coinbase received 2,182 extra complaints under the product category “virtual currency,” the largest of any company, according to the study.
The report’s findings are concerning, given that digital payment users in the United States do not have the same level of consumer protection as credit and debit card users. For example, the Truth in Lending Act and the Fair Credit Billing Act give credit card customers a $50 cap on losses, while the Electronic Fund Transfer Act protects debit card users from scams. Users using digital wallets are also protected to some extent, although they are still exposed to phishing scams and human error, such as moving money to the wrong account. Poor customer support from digital wallet providers exacerbates user complaints, according to the report.
*To see a larger version, click on the image below (charted by Statista)

Complaints regarding digital wallets and payment apps to US federal regulators by company (April… [+] 2017-April 2021).
Statista
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