Senate Democrats have called on PayPal and Cash App to enhance user protection measures on their peer-to-peer payment apps in order to combat fraud. Senators Sherrod Brown, Elizabeth Warren, Jack Reed, and Bob Menendez have specifically requested detailed information on fraud detection and prevention methods from Venmo, owned by PayPal, and Cash App, owned by Block.
The lawmakers expressed concern that the companies’ consumer protection policies have not kept up with the increasing interest in their platforms, leaving users vulnerable to harm. Letters addressing these concerns were sent to PayPal CEO Dan Shulman and Cash App CEO Brian Grassadonia.
Cash App has yet to comment on the matter, while PayPal has stated that it proactively employs fraud detection tools and manual investigation to protect customers from potential fraudulent activities.
In terms of payment volume, Venmo surpassed expectations with a 9% increase, reaching $62.7 billion, as highlighted in PayPal’s first-quarter investor update. Cash App, on the other hand, recorded over $203 billion in transactions from its 51 million monthly users as of December 2022, according to a Block annual report.
PayPal has acknowledged the possibility of money laundering and other illegal activities occurring on Venmo, expressing uncertainties about the effectiveness of its current fraud reduction measures. Block, too, has raised concerns about its ability to manage identified risks.
The senators referred to a Consumer Reports survey that found 9% of weekly P2P users falling victim to scams, and 12% inadvertently sending money to the wrong recipient.
To address these issues, the senators have requested comprehensive responses from PayPal and Cash App, including information on fraud reports from the past five years and their fraud detection policies, by June 30.
This letter is part of ongoing efforts led by Senator Warren to ensure consumer safety in P2P platforms. In April 2022, Senators Menendez and Reed also joined her in an oversight letter to major banks overseeing the Zelle money transfer app due to reports of widespread fraud and theft on the platform.
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