Regulator Probes PayPal Mobile App Subsidiary Venmo
PayPal subsidiary Venmo under investigation by US consumer regulator over ‘unauthorised’ debt collections as new administration tightens enforcement
The US consumer regulator has launched a probe into Venmo, a mobile app-based person-to-person payments service operated by PayPal.
PayPal said in a regulatory filing that it had received a “Civil Investigative Demand” from the US’ Consumer Financial Protection Bureau (CFPB) covering “Venmo’s unauthorised funds transfers and collections processes, and related matters”.
The agency requested documents and answers to written questions, PayPal said, adding that it is cooperating with the probe.
Debt collection
Venmo has come under criticism in the past for threatening to hand users over to debt collection agencies when their accounts are overdrawn, even if they are the victims of scams.
The company reportedly amended its user agreement to give itself the power to recover money from customers by seizing it from their separate accounts at PayPal.
It continued its aggressive collection practices during the Covid-19 pandemic, according to reports.
PayPal said the notice arrived on 21 January, the day after the inauguration of US president Joe Biden, who appointed Dave Uejio as acting CFPB director upon taking office.
Some industry watchers said they expect Venmo to more strictly adhere to consumer protection regulations under Biden.
Compliance
Venmo said in a statement it “remains deeply committed to its compliance obligations and the company works closely with regulators around the world to adhere to all applicable rules and regulations in the markets in which we operate”.
Venmo lost some of its business handling bill payments in bars and restaurants due to Covid-19, but during the course of last year became increasingly popular with users looking to avoid using cash and cards during the pandemic.
The company handled about $47 billion (£34bn) in transfers in the fourth quarter of 2020, about a 60 percent increase from the same period the previous year.
Venmo competes in the US with other app-based services such as Cash, operated by payments processor Square.
The company was acquired by PayPal in 2013.
