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Please check back later. Don't store cash in Venmo and PayPal, US regulator warns Chris Isidore By Chris Isidore, CNN Updated 1:58 PM EDT, Fri June 2, 2023 Link Copied! The Silicon Valley Bank branch office in downtown San Francisco, California, U.S., March 13, 2023. What is a bank run? 01:59 - Source: CNN Latest in tech 16 videos The Silicon Valley Bank branch office in downtown San Francisco, California, U.S., March 13, 2023. What is a bank run? 01:59 Now playing - Source: CNN "Sophia" an artificially intelligent (AI) human-like robot developed by Hong Kong-based humanoid robotics company Hanson Robotics is pictured during the "AI for Good" Global Summit hosted at the International Telecommunication Union (ITU) on June 7, 2017, in Geneva.The meeting aim to provide a neutral platform for government officials, UN agencies, NGO's, industry leaders, and AI experts to discuss the ethical, technical, societal and policy issues related to AI. / AFP PHOTO / Fabrice COFFRINIFABRICE COFFRINI/AFP/Getty Images Experts warn AI could pose 'extinction' risk for humanity 02:06 Now playing - Source: CNN Jon Sarlin Amanda Steen 1 CNN tried an AI flirt app. It was shockingly pervy 03:19 Now playing - Source: CNN Business aoc twitter hearing These two moments show how Twitter's choices helped former President Trump 01:55 Now playing - Source: CNN Business deepfake newscasters wang pkg These newscasters you may have seen online are not real people 03:15 Now playing - Source: CNN People wait in line at the April 2022 grand opening of the Bored & Hungry pop-up burger restaurant in Long Beach, California, which used Bored Ape images. 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Is it worth it? 02:05 Now playing - Source: CNN corvette eray thumb See the first electrified and fastest-accelerating Corvette 01:16 Now playing - Source: CNN Business Trump Facebook Employees Debate 02 Facebook could soon reinstate Trump. Two former senior staffers debate the decision 03:35 Now playing - Source: CNN Business 19 TikTok STOCK Experts raising alarm over 'crisis' of TikTok's impact on mental health 03:12 Now playing - Source: CNN See More Videos New York CNN -- Payment apps like PayPal and Venmo might be convenient, but they're not banks -- and a federal financial services watchdog is worried that too many consumers are treating them as such. Some consumers are using services like PayPal, Venmo, Cash App and Apple Pay for direct deposit of paychecks, or simply storing lots of cash in them. But the Consumer Financial Protection Bureau wants people to know they don't have the same protections as a bank or credit union. CFPB Director Rohit Chopra warned in a Thursday statement that payment services like PayPal, Venmo, Cash App and Apple Pay "are increasingly used as substitutes for a traditional bank or credit union account but lack the same protections to ensure that funds are safe." More than three-quarters of US adults have used at least one payment app, the agency said. The watchdog released the comments in the wake of high profile bank failures like Silicon Valley Bank and Signature Bank. Their customers were made whole because account holders at federally insured financial institutions are guaranteed to get back up to $250,000 per account if the bank fails. (In the case of those two banks, the FDIC even abolished the limit, covering all deposits.) Payment apps, however, are not federally insured on the institution level. If one of those companies were to go under, then, customers could lose their funds. Billions of consumer dollars at risk, agency says There are billions of dollars at risk for consumers as a result of payment apps encouraging customers to store funds rather than just make transactions, said the CFPB in its report. These apps are also not immune to the same type of panic-based bank run that closed down Silicon Valley Bank and others recently, the agency added. PayPal Holdings (PYPL), which owns both PayPal and Venmo, did not reply to a request for comment Friday. Neither did rival Block (SQ), which owns Cash App as well as payment system Square. But industry trade group the Financial Technology Association, which represents both firms, defended the safety of the funds. "Tens of millions of American consumers and small businesses rely on payment apps to better spend, manage, and send their money. These accounts are safe and transparent," the group said in the statement. "FTA members provide clear and easy-to-understand terms in all their products and prioritize consumer protection every step of the way." Financial security STOCK Adobe Stock Beyond FDIC insurance: How protected is your money outside of banks? Some money held in certain types of payment app accounts -- PayPal Savings, for example -- are indeed deposited in FDIC-member banks and thus would be protected. But much of the funds are held by the services themselves, without federal insurance. The CFPB did not provide an estimate of how much money is held in payment apps, although it did say that transaction volume across all US service providers was estimated at approximately $893 billion across all of 2022 and may reach nearly $1.6 trillion by 2027. The agency also noted the payment apps make money by investing funds their customers store on the apps, similar to how banks invest their customers deposits. But unlike insured bank deposits, those stored funds would be at risk if the payment apps' investments lose value -- which itself could spark a run on the the deposits, the CFPB said. The agency also made reference to last year's failure of crypto currency platform FTX, which left customers unable to access hundreds of millions of dollars worth of their assets, leaving them to become creditors in the bankruptcy cases. "If a nonbank payment app was to go bankrupt as a result of these risks, customers may not be the only creditors with claims on the company's remaining assets," said the CFPB. "Even if consumers do not ultimately lose any funds, they may face significant delays in accessing their funds while the bankruptcy process unfolds." Related More from CNN Business [230602164203-us-job-market-0602] Mario Tama/Getty Images Alarm bells were ringing about a potential US recession, but then this week's jobs report landed Jun 03, 2023 [230531083024-teenagers-social-media] Willie B. 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