Treliant Takeaway…CFPB Report Identifies Issues with Increased Servicemember Use of Digital Payment Apps

CFPB Report Identifies Issues with Increased Servicemember Use of Digital Payment Apps

• Source: consumerfinance.gov

Treliant Takeaway:

The CFPB has identified that the number of servicemember users of digital payment apps is growing, along with the total number of servicemember complaints related to their experience with digital payment app providers. The ease of making payments while on the go is attractive to all consumers, but the transient lives and travel schedules of servicemembers and the steady income provided to our military makes a servicemember an attractive target for identity theft and scams. Additionally, the potential for significant harm to the servicemember’s financial position and possible impacts to security clearances, that if not maintained, can create a situation where it is difficult for the servicemember to remain in military service can be a direct result of poor error resolution investigations and processes. Digital payment app providers must be alert and responsive to these servicemember risks, with a focus on timely resolutions when alerted to specific issues. All consumer users of digital payment apps are exposed to risk, but the growing risks to servicemembers has gained the attention of the CFPB.

Treliant’s subject matter experts in digital payments, Reg E for complaints and disputes, SCRA, and process improvements can assist in making your digital payment app business processes efficient and compliant. Treliant excels in process assessments with identification and assessment of controls and compliance risks and applicability to all regulations, policies, procedures and training.  Give us a call for a discussion of how we can assist.

Highlights:

The CFPB Office of Servicemember Affairs has released its Annual Report that includes the top financial concerns facing military families.  The CFPB has determined that the usage of digital payment apps is growing in the servicemember community and that complaints from servicemembers related to digital payment app providers have increased at a rate faster than the complaints from the general population of digital payment app users.  Many of the reported issues and complaints received from servicemembers relate to fraud, scams and lack of timely or substantive resolutions from digital payment app providers.  The report also highlights situations that are unique to servicemembers, such as a transient lifestyle related to changes in duty stations, a steady income with digital payment apps often tied to bank accounts, and the need for quick and complete resolutions to fraud and scam issues because of security clearances required for their jobs.

The CFPB Annual Report also includes recommendations for digital payment app providers to consider when addressing these emerging risks such as improving the safety and security of the digital app processes and networks to prevent fraud, improve responsiveness when fraud does occur and tailor policies on refunds for fraud losses that recognize the unique experiences of military families.

Digital payment app providers and financial institutions should consider reviewing their dispute/error resolution procedures and processes to ensure that claims of identity theft and unauthorized transactions are investigated thoroughly and that denials of claims are clearly supported and appropriate.  Additionally, consider a review of operational steps and communication between fraud operations teams and dispute processing teams to ensure action is taken quickly to attempt to recover funds when possible.

The complete CFPB report can be found at Office of Servicemember Affairs Annual Report 2022