The bureau urges payment providers to safeguard their networks to prevent security threats and potential fraud faced by servicemembers.
06/21/2023 2:10 P.M.
2 minute read
The Consumer Financial Protection Bureau (CFPB) released its annual report Tuesday highlighting the top financial concerns faced by military families.
The report sheds light on the increasing use of digital payment apps within the servicemember community. It also emphasizes the unique risks faced by servicemembers when using these apps, including potential abuse by bad actors. The report urges digital payment app providers to address these concerns promptly and provide better protection to military families.
The report reveals a significant rise in consumer complaints related to digital payment apps, with over 1,100 complaints filed in 2022 alone. These complaints predominantly revolve around fraud and scams, indicating that military families are becoming increasingly vulnerable to financial threats through their use of digital payment apps.
The report highlights several key risks that servicemembers and their families encounter when using digital payment apps:
- Financial Harm: The report reveals instances where servicemembers, particularly during relocations or changes of duty station, have fallen victim to online scams, jeopardizing their overall financial stability. This can impact their ability to continue their service or maintain a security clearance.
- Identity Theft: With their steady income, servicemembers often become targets for identity thieves seeking unauthorized access to their bank accounts, which are frequently linked to digital payment apps. The CFPB has received complaints where servicemembers had their identities stolen, followed by unauthorized money transfers out of their digital payment app accounts.
- Resolution Challenges: Complaints indicate that digital payment app providers often fail to provide timely and substantive resolutions to servicemember complaints. Servicemembers and veterans who have lost money due to unauthorized transfers struggle to recover their funds, exacerbating the financial strain they face.
To mitigate these emerging risks, the bureau recommends digital payment app providers:
- Invest in privacy and security technology to safeguard their networks and prevent fraud. By proactively identifying and limiting fraudulent activity, including removing repeat offenders, they can improve the overall safety of their products.
- Collaborate closely to expedite resolution processes. This is particularly crucial for military families during relocations or deployments, where quick access to locked funds can be essential.
- Adopt comprehensive approaches to reimbursements in cases of fraud. Servicemembers may require more time to identify or respond to fraud, and suitable refund policies should reflect these circumstances.
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