The Federal Trade Commission (FTC) has reached a settlement with Venmo owner PayPal over how the money transfer app handled privacy disclosures and delayed funds to customers after saying their money was available.
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Venmo dinged by the FTC
Venmo is supposed to be a consumer-friendly way to transfer money to another person using your phone. It’s beloved by millennials and other age groups for everything from splitting the dinner bill to paying someone back for concert tickets to a host of other garden variety money transfer situations.
But not everything is hunky-dory in Venmo mobile payment land.
“Many thousands of consumers have complained to Venmo about the delays or loss of funds from their Venmo balance when they tried to transfer funds to their bank accounts,” the FTC notes in its complaint.
Users were left in the lurch when money that was credited to them got clawed back by Venmo, pending further review of the transactions.
Venmo was not forthright about these possible freeze times related to incoming funds and therefore caused app users to run into financial difficulty. Some consumers reported to the FTC that they were unable to pay their rent or other bills because of Venmo’s practices.
On the privacy front, the FTC says Venmo’s social news feeds contained some info about transactions between users. And while the company does offer privacy settings to limit the sharing of that info, Venmo was not forthright about how those settings worked.
Finally, the company was also taken to task by the FTC for promising it used “bank-grade security systems” to protect consumer financial info when that wasn’t initially the case.
“Venmo failed to provide consumers with security notifications regarding changes to account settings…including informing a consumer that her password or e-mail address had changed, that a new email address had been added, or that a new device was added to her account,” the FTC complaint says.
That created an environment where unauthorized users could take over consumer accounts and withdraw funds unnoticed.
In its defense, Venmo says it has “taken steps to significantly strengthen our privacy and data security practices” since being brought into the PayPal fold in 2015, according to a statement.
Under the terms of the FTC settlement, Venmo will be forbidden from misrepresenting its privacy settings, level of security and the temporary holds its service may put on user funds.
No monetary damages have been assessed on Venmo or parent company PayPal at this point. The consent agreement between PayPal and the FTC is still under review and the consumer watchdog group is actively seeking public comment on the decision.
Submit your comments to the FTC here through March 29, 2018.
