CFPB warns versus keeping cash on apps doing not have deposit insurance coverage

The Consumer Financial Protection Bureau on Thursday released a customer advisory caution that lots of popular nonbank payment apps do not have deposit insurance coverage and for that reason the defense of keeping cash in a checking account. The firm kept in mind in an accompanying declaration that possibly billions of dollars are saved in payment apps, however those consumers might lose that cash ought to the app business stop working. By contrast, the FDIC and NCUA secure deposits approximately $250,000 under the exact same owner or owners, it stated.

“When users of these digital apps receive payments, the funds are not usually swept automatically to the recipient’s linked bank or credit union account. Instead, companies hold and invest the funds,” CFPB stated. “These activities are not typically subjected to the same oversight that an insured bank or credit union faces.” The firm recommended that till payment apps are created to immediately sweep balances into users’ insured accounts, “consumers may need to take action to move their balances stored in payment apps.”