Venmo is a PayPal-owned money-transfer service that allows users to send payments to each other over the internet. Yesterday, PayPal revealed that Venmo is currently under investigation by federal regulators.
In its quarterly earnings report PayPal discloses that it received a Civil Investigative Demand from the Federal Trade Commission on March 28 as part of the FTC’s “investigation to determine
whether we, through our Venmo service, have been or are engaged in deceptive or unfair practices in violation of the Federal Trade Commission Act.”
The FTC is seeking documents and answers to Venmo related questions, which could ultimatley lead to an enforcement action by, or settlement with, the government, along with possible changes to the way Venmo operates.
Venmo, which handles hundreds of millions of dollars each year in peer-to-peer transfers, has been around since 2009. PayPal acquired the service in 2009.
The idea behind Venmo was to allow individuals to transfer money for non-purchases. For example, say you and your friends went to dinner and you forgot your wallet or you were unable to cover your porition of the bill because you were waiting for your paycheck. You could later use Venmo to transfer money to whichever friend covered for you.
Last year, PayPal announced that merchants would be able to use Venmo to accept payments from customers.
PayPal isn’t saying which specific aspects of Venmo are under the regulatory microscope, only stating that the company is cooperating with the FTC.
by Chris Morran via Consumerist
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