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| CFPB Reminds Consumers of Nonbank Payment Provider Risks |
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The CFPB Thursday released an Issue Spotlight analyzing deposit insurance coverage and reminding consumers of potential risks for funds stored through nonbank payment providers, such as Venmo, PayPal, and Cash App.
In the report, the CFPB notes more than three quarters of adults in the U.S. have used a payment app. In addition, the bureau highlighted that user agreements for digital payment apps often lack information on where funds are being held or invested, whether and under what conditions they may be insured, and what would happen if the company or the entity holding the funds were to fail.
“Consumers should be aware of these risks if they choose to leave a balance on these nonbank payment apps,” wrote the CFPB. “To minimize these risks, consumers may choose to transfer their nonbank payment app balances back to their federally insured deposit accounts, where they have a direct relationship with an FDIC-insured bank or NCUA-insured credit union.
“The CFPB, in coordination with other state and federal regulators, will continue to monitor the evolution of this segment of the payments ecosystem and consider whether further steps should be taken to protect consumers,” concluded the bureau.
For more information, view the full Issue Spotlight at the link below.
NAFCU will continue to advocate for a fair distribution of responsibility to ensure a level playing field as nonbank payment services drive further disaggregation of banking services.
Copyright 2023. NAFCU.
Read the full article in Spotlight at this (link) |
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