Customers of Venmo, PayPal and CashApp should not store their money for the long term with these apps because their funds might not be safe during a crisis, the Consumer Financial Protection Bureau warned on Thursday.
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The alert comes several weeks after the failure of Silicon Valley Bank, Signature Bank and First Republic Bank, which all experienced bank runs after fearful customers with uninsured deposits pulled their money en masse.The Federal Deposit Insurance Corporation insures bank accounts up to $250,000. But money stored in Venmo or CashApp or Apple Pay Cash is not being held in a traditional bank account.
“Consumers may not fully appreciate when, or under what conditions, they would be protected by deposit insurance,” the agency added in its report.
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