WASHINGTON — Senate Democrats on Thursday urged Paypal and Cash App to better protect users of its peer-to-peer payment app from fraud.
Sen. Sherrod Brown of Ohio, along with Sens. Elizabeth Warren of Massachusetts, Jack Reed of Rhode Island and Bob Menendez of New Jersey, demanded detailed fraud detection and prevention methods from PayPal-owned Venmo and the Cash App, which was developed by jam.
The companies’ “consumer protection policies have not kept pace with the surge in customer interest in the platform,” the lawmakers wrote, adding that they were not doing enough to protect users from harm the service could bring.
These letters were sent to the President and CEO of PayPal Dan Shulman and Cash App CEO Brian Grassadogna.
PayPal, Venmo and Cash App did not immediately respond to CNBC’s request for comment.
Venmo’s total payment volume is said to rise 9% to $62.7 billion, beating expectations PayPal Q1 Investor Update. Cash App transactions also drive inflows of over $203 billion to 51 million monthly users by December 2022, according to The Block annual report.
Meanwhile, PayPal in its annual report It expects users to continue attempting to launder money, evade sanctions, and other illegal activities on Venmo, and that its current fraud reduction measures “may not be effective in detecting and preventing fraud, especially new and evolving forms of fraud or in conjunction with new or expanding product supply.”
Block also said it may not be able to “prevent or mitigate” identified or potential risks under its risk management procedures in its annual report.
In their letter, the lawmakers cited January’s Consumer Reports poll 9% of weekly P2P users were found to be victims of scams and 12% accidentally sent money to the wrong recipient. 2022 Pew Research Center Report They wrote that they found that black and Hispanic P2P users were twice as likely to be scammed than white users.
Lawmakers have until June 30 to provide a comprehensive response to a series of requests, including consumer fraud reports and fraud detection and elimination policies for the past five calendar years.
“Americans deserve a payment system that offers them speed and convenience, but most importantly, keeps their money safe,” they wrote.
The letter is part of an ongoing investigation into consumer safety on peer-to-peer platforms that has been spearheaded by Warren over the past several years. Menendez and Reed join her in April 2022 supervision letter After the Big Seven Banks Control Money Transfer App Zelle Report revealed rampant fraud and theft on the platform.