By Christina Spicer  |  February 8, 2021

Category: Debt Collection

CFPB investigating Venmo collection practices

The popular payback app, Venmo, is reportedly under investigation by the Consumer Finance Protection Bureau over its collection practices, including how it pursues consumers who owe money.

The consumer watchdog agency slapped Venmo’s parent company, PayPal, with a Civil Investigative Demand, according to The Wall Street Journal. The filing is seeking information “related to Venmo’s unauthorized funds transfers and collections processes, and related matters.”

While the CFPB investigation is not a class action lawsuit, Top Class Actions works to keep viewers informed about issues affecting consumers, including potentially questionable debt collection practices.

Venmo Collection Practices Called Into Question

Venmo is an app that allows users to request and exchange money electronically. It has quickly soared in popularity, with active Venmo accounts rising by 32% in 2020, driven by the rise in preference for touchless ways to exchange funds, according to The Verge.

In 2020, consumers used the Venmo app to exchange $47 billion in payments – an increase of 60% from 2019, according to Reuters.

The app appears to instantly transfer money between users; however, it may take up to a day for the “Venmo-ed” funds to leave a consumer’s bank account. During this time, Venmo will cover the amount; however, if the user does not have sufficient funds in their bank account to cover the transfer, Venmo will pursue the debt.

The app has gone after users with debts from $7 to $3,000, telling them that by “not paying, you run the risk of being reported to a collection agency”, according to The Wall Street Journal. 

This investigation isn’t the first time Venmo’s collection practices have come under scrutiny. In 2019, the company was accused of pursuing debt collection against those who say they were scam victims. In addition, Venmo has reportedly been criticized for continuing the same collection practices during the coronavirus pandemic.

For its part, PayPal told The Verge that it was working with the CFPB to respond to the agency’s investigation. It reportedly stated that its subsidiary Venmo “remains deeply committed to its compliance obligations and the company works closely with regulators around the world.”

Venmo has also reportedly insisted that its user agreement outlines its collection practices, adding that it stays in line with all state laws when it comes to debt collection.

Have you been subjected to Venmo collection practices? Tell us about your experience in the comment section below.

We tell you about cash you can claim EVERY WEEK! Sign up for our free newsletter.

127 thoughts onVenmo Collection Practices Under Scrutiny by Consumer Watchdog

  1. Ann Slavec says:

    I was scammed on FB for the likes of $1700 (firend’s father moving to hospice (which was true) selling all his stuff inexpensively – nice photos showing it all) using Venmo for payment. I cancelled the pending payment after 5 minutes of learning of the scam – immediately. I notified the bank and they said the transaction had not gone through – but later it was marked as “completed” – after a day or couple of days- indicating (to me) the scammer (jrsllc3@yahoo) had been paid. I called Venmo who sent $1700 to my bank to cover the loss. Then Venmo has been contacting me saying I need to pay back the $1700. ???I am not privy to their backend processes. But they say the bank was never paid. How am I supposed to know that? Venmo is in the transaction business #1) Why did they no cancel immediately? Why did it go to my bank – after hours of processing? #2)if it didn’t go to the bank – then why did it say “complete” instead of “incomplete” or “payment denied” #3) Why did Venmo pay my bank? And now want the money back? If they made an error in paying the bank and didn’t need to? I am not privy to their back office practices and have not way to verify they aren’t scamming me in some way or overseeing their mistakes if one was made. I went about my business assuming we were at net zero – that Venmo and the bank had covered the fraud – I spent the money in my account – I am in between jobs – I don’t have any extra money sitting around. I don’t want to be paying for the fraud, it clearly was and I contacted Venmo immediately – responsibly. Did they investigate the scammer? We pay high transaction fees for these unfortunate incidents. This is Venmo’s business – how can they have made three big mistakes to mislead me in thinking the fraud was covered and investigated? And in the end, try to get me to pay for it.

    1. Erika Hart says:

      Same exact thing happened to me. Same FB story. $1800. But I realized it was a scam immediately because I contacted the acquaintance. I closed my bank account before funds could be drawn but Venmo already paid the person. I filed with Venmo immediately as well. They continue to contact me stating I need to pay them back. I keep telling them I protected myself and closed my bank account, I filed fraud with Venmo, and it’s not my fault they don’t have protections for themselves. They won’t stop calling me.

      1. Spencer says:

        Do you just not answer? What about your credit score?

  2. Monica McCann says:

    I was. Paid rent owed and late by a tennatn, I do not use Venmo often, then my Tennant reversed the payment, Venmo is now trying to collect from me since I had moved the funds to my bank account and even though I filled a complaint, they ruled in her favor, saying her bank made the decision. This person is a scammer and Venmo is not a safe platform

  3. justine middleton says:

    I was part of a multi-tier scam that involved hacked facebook and email and an impersonater fraud hotline where the impersonator used an app to get into my phone. There are two transactions each for $999 within seconds of each other. I tried to stop the payment insitantly through comments, calls, emails, and whatever I could navigate to do to stop the payment. I shut down my bank account and anything touching money that went trhough my phone. The only problem I have is Venmo. I have called and emailed numerous times. I was told that my case was “escalated” but I never heard back apart from automated emails asking for money–the last of which is a notification that I’m being sent to collections. I sent them my police report. Every time I call I get a person who only speaks to me through answers prompted by their knowledge base and they never seem to have any background about my other calls or my alleged active claim. I’m actually pretty shocked at how I’m being treated. I have an 800 credits score. This is crazy.

1 9 10 11

Leave a Reply

Your email address will not be published. By submitting your comment and contact information, you agree to receive marketing emails from Top Class Actions regarding this and/or similar lawsuits or settlements, and/or to be contacted by an attorney or law firm to discuss the details of your potential case at no charge to you if you qualify. Required fields are marked *

Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.