P2P payments surged during pandemic. So did the complaints about them.

Complaints against peer-to-peer payments services spiked during the last year, a new report found, as U.S. consumers increasingly flocked to apps like Venmo, Cash App or Zelle to transfer money.

The findings point to the “hidden costs” of using peer-to-peer payment apps, according to the U.S. Public Interest Research Group, which analyzed complaints submitted to a Consumer Financial Protection Bureau database.

The group found that complaints to the CFPB over mobile or digital wallets — where people can store money and make quick transfers to others — jumped to 5,283 between May 2020 and April 2021 from 1,819 in the prior-year period. In their complaints, customers often mentioned difficulties in resolving issues through the apps’ service departments, the report noted.

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“People are really frustrated that these apps don't try to help them. They don't really do much work at it, and their responses are very slow,” said report author Ed Mierzwinski, who is senior director of federal consumer programs at the U.S. PIRG Education Fund.

The rise in complaints follows a rapid increase in consumers’ use of payment apps during the coronavirus pandemic. PayPal, which runs its own digital payments service and also owns Venmo, said in the first quarter that payment volumes for the prior 12 months exceeded $1 trillion for the first time in its history.

Zelle, a P2P app run by the bank-owned Early Warning Services LLC, has also experienced more use during the pandemic. Another top P2P service, Square’s Cash App, saw its profits boom, mostly due to a surge in bitcoin transactions.

The Electronic Transactions Association, whose members include Square, PayPal and Early Warning Services, said in a statement to American Banker that its members “work directly with consumers to assist them, whether it be through online or live phone support.”

“Behind the scenes, ETA members are unwavering in their commitment to protecting consumers from fraud, scams, and unauthorized transactions,” ETA CEO Jodie Kelley said. “The security of consumers and their account information is always a top priority.”

PayPal and Square have accounted for most of the complaints since the CFPB began tracking customer concerns over digital wallets in 2017, the report found, with 4,431 complaints for PayPal and 1,202 for Square.

A few big banks like PNC Financial Services Group, JPMorgan Chase, Bank of America and Wells Fargo had far fewer complaints but still made the list of companies with the most reports. The four banks are among the co-owners of Early Warning Services, which itself received 212 complaints.

Coinbase, a cryptocurrency trading platform, received the third-most complaints over digital wallets with 755. It also registered 2,182 complaints to the CFPB under the category of virtual currency, the report said.

In a statement, a Coinbase spokesperson said the company has quadrupled its support team capacity in the past few months and made other changes to speed up it processes and improve its identity verification so customers can access accounts. "Coinbase strives to be the most trusted and easy-to-use platform for accessing the cryptoeconomy," the spokesperson said. "We understand how frustrating it is when our customers experience issues such as the inability to access their account or make transactions. Improving our customer support experience remains a top priority."

Most of the complaints in the CFPB database revolved around managing, opening and closing accounts. The CFPB also received thousands of complaints about unauthorized transactions and other potentially fraudulent activities.

U.S. PIRG recommends consumers only use P2P apps to send money to people they trust and to ask people to send requests for money first to ensure they are transferring funds to the right account. It also recommends that customers review their privacy and security settings, pointing to a recent report from BuzzFeed News that found President Joe Biden’s Venmo account through a quick search.

A Venmo spokesperson said last month that users can make their transactions private and determine their own privacy settings through the app.

In its report, the consumer group also laid out two policy recommendations. It is asking the CFPB to require payments firms to more diligently investigate errors and fraud and it is urging Congress to change the Electronic Fund Transfer Act to broaden protections of consumers who are victims of fraud.

This story has been updated to include comments from Coinbase.