Contactless payment became a standard during the COVID-19 pandemic, and digital wallets became the world's best friend. As a result, more and more Americans continued to ditch cash and dived into the world of digital payment technology.
The Power of Digital Wallet
The U.S. Public Interest Research Group reported that the volume of digital wallet complaints continues to rise as more users become interested in the technology. On the other hand, the Consumer Financial Protection Bureau (CFPB) received over 9,000 digital wallet complaints from April 2017 to April 2021.
According to Forbes, just a little over 1,000 digital wallet complaints took place during the first year, while CFPB handled over 5,200 complaints in the year leading to April 2021.
The report mentioned that a total of 970 digital wallet complaints occurred in April this year, almost twice as much as the previous peak of protests in July 2020.
How and Why Major Companies Contribute to Digital Wallet Complaints
The report carefully analyzed the complaint concerning third-party digital wallets or companies' digital wallet products that have access to the users' bank accounts. Numerous platforms already account for the massive number of complaints, and at least two-thirds of them are focused on three major companies.
These companies include PayPal, which owns Venmo; Square, which owns Cash App; and Coinbase.
PayPal typically operates its services alongside its digital wallet app, Venmo. Throughout the years, it has attracted the most number of complaints out of all the other companies.
However, it is not much of a surprise considering it has the most extensive user base. Forbes reported that from April 2017 to April 2021, PayPal had 4,431 digital wallet complaints. These include opening, managing, and closing mobile wallet accounts alongside accessing funds.
On the other hand, Square comes second to PayPal with 1,202 digital wallet complaints. The company's main issue was unauthorized transactions, which is quite tricky.
Sitting in third place is the Coinbase digital wallet. It is known for allowing cryptocurrency users to store their funds in digital wallet services. Users often buy and sell various brands of cryptocurrencies in the app.
Coinbase had 755 digital wallet complaints, and its top issues were closing, managing, and opening mobile wallet accounts.
The media outlet noted that the company garnered additional complaints totaling 2,182. The complaints were under the "virtual currency" product category, and it is the most number of complaints among all companies.
Why Digital Wallet Complaints Are Dangerous
Furthermore, the report's findings are bothersome, especially because digital wallet users in the United States do not have the same consumer protection levels that debit and credit card users have.
One way it can be risky is because the Fair Credit Billing Act and Truth in Lending Act can give credit card users a $50 limit on their losses. On the other hand, debit card users are protected by Electronic Fund Transfer Act from losses due to scams.
Digital wallet users are left with little to no protection, far more risky than using credit and debit cards.
This article is owned by Tech Times
Written by Fran Sanders