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CFPB warns against storing cash in Venmo, PayPal, and Cash App
The CFPB says P2P app balances lack federal deposit insurance and that users may have unclear protections if the company fails.
Yahoo Finance highlights the Consumer Financial Protection Bureau warning consumers not to treat Venmo, PayPal, and Cash App as safe places to store money, despite their convenience and widespread use.
The CFPB’s concern centers on deposit protection, since money kept in a nonbank payment app does not benefit from federal deposit insurance. By contrast, moving funds to an FDIC member bank or an NCUA member credit union can provide protection up to the federal limit of $250,000 per depositor, per institution, per ownership category, including in a bank failure.
Yahoo Finance also notes that the CFPB points to unclear user agreements for what happens to customers’ funds in the event a P2P provider fails. The outlet adds that P2P companies may handle customer funds with less oversight than insured depository institutions.