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As a result, unauthorized users were able to withdraw funds from consumer accounts – without Venmo notifying consumers.
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Until at least March 2015, Venmo failed to notify users when their password or email address had been changed, or when a new device had been added to their account. The FTC also alleges that, until at least March 2015, Venmo misrepresented the extent of security it provided to consumer financial accounts, claiming that it utilized “bank-grade security systems.” The FTC alleges, however, that through at least August 2014, Venmo did not have a written information security program. According to the complaint, Venmo at times misrepresented what steps were necessary to keep transactions private and in any case failed to adequately disclose these facts to consumers. Also, unless that second setting is changed, where a consumer has specifically chosen to keep a particular transaction private, the other participant in the transaction can override the consumer’s privacy choices and retroactively make a private transaction public. Unless the consumer changes both settings, certain transactions may still be shared publicly. Venmo offers privacy settings that enable consumers to limit who can view such transactions, but Venmo misled consumers about how those settings work.Īccording to the complaint, a Venmo consumer who limits their “default audience” for “future transactions” has not ensured that their transactions will remain private unless they also change a second setting. By default, some information about transactions between users is displayed on Venmo’s social news feed. The FTC also alleges that Venmo misled consumers about the extent to which they could keep transactions private. This case sends a strong message that financial institutions like Venmo need to focus on privacy and security from day one.”
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“The payment service also misled consumers about how to keep their transaction information private. “Consumers suffered real harm when Venmo did not live up to the promises it made to users about the availability of their money,” said Acting FTC Chairman Maureen K. Other consumers who used Venmo to receive payment for event tickets or other valuable items relied on the notifications that money had been credited to their Venmo account, delivered the item to the purchaser, and consequently incurred a financial loss when Venmo removed the funds. The FTC alleges that many consumers said they experienced financial hardships, such as being unable to pay their rent or other bills, because they could not transfer the money as promised by Venmo. As a result, consumers complained that at times, Venmo delayed the withdrawal of funds or reversed the underlying transactions after initially notifying them that the funds were available. However, the FTC says that Venmo failed to disclose that these funds could be frozen or removed based on the results of Venmo’s review of the underlying transaction. In addition, Venmo misrepresented the extent to which consumers’ financial accounts were protected by “bank grade security systems,” and violated the Gramm-Leach-Bliley Act’s Safeguards and Privacy Rules, the complaint alleges.Īccording to the complaint, Venmo sent its users notifications that money had been credited to their Venmo balances and was available for transfer to an external bank account. In its complaint, the FTC also charges that Venmo misled consumers about the extent to which they could control the privacy of their transactions. over allegations that the company told users of its Venmo peer-to-peer payment service that money credited to their Venmo balances could be transferred to external bank accounts without adequately disclosing that the transactions were still subject to review and that funds could be frozen or removed. The Federal Trade Commission has reached a settlement with PayPal, Inc. About the FTC Show/hide About the FTC menu items.News and Events Show/hide News and Events menu items.Advice and Guidance Show/hide Advice and Guidance menu items.Competition and Consumer Protection Guidance Documents.Enforcement Show/hide Enforcement menu items.