“A rapidly growing financial threat to military families” is how digital payment apps are being characterized by the federal consumer financial protection agency in a report released Tuesday.
However, the same report also offers recommendations for the app providers to address the threat.
The Consumer Financial Protection Bureau (CFPB), in its annual report on the top financial concerns facing military families, said some servicemembers have told the bureau (via complaints) about incurring serious financial harm from scams and fraud when using the services. Their complaints suggest, the bureau alleged, that digital payment app providers often fail to provide timely and substantive resolutions.
The CFPB said last year that servicemembers, veterans, and their families submitted nearly 66,400 complaints to the CFPB, a 55% increase from 2021. Of those complaints, the bureau said, 1,100 centered on digital payment apps (about 1.6%). However, the agency called complaints over digital payment apps from servicemembers one of the fastest-growing complaint types it received.
“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 bureau said in a release.
The report outlines various risks to military families from the apps, including: Serious financial harm from fraud and scams; identity theft and unauthorized account access; failure of providers to offer timely and substantive resolutions to servicemember complaints.
To address those risks, the report recommends several actions for the payment app providers to take, including:
- Improve the safety and security of their networks to prevent fraud
- Improve their responsiveness in the event fraud does occur
- Tailor policies on refunds for fraud losses that recognize the unique experiences of military families.