WASHINGTON – Venmo, the payments app owned by PayPal, has reached a settlement with the Federal Trade Commission (FTC) over charges that it misled users about some of its practices.
Venmo, which allows people to pay one another for meals, rent, and more via a mobile app, had been accused of not making it clear to its users that their fund transfers might be delayed.
“Consumers suffered real harm when Venmo did not live up to the promises it made to users about the availability of their money,” acting FTC Chairman Maureen K. Ohlhausen said in a statement.
Under the settlement, Venmo cannot misrepresent restrictions on the use of its service, what privacy controls its users have, or the extent of security it provides to users, the FTC announced earlier this week.
Venmo also faced allegations related to its privacy settings. The app has a social-networking component – transactions between users can be publicly viewable on a feed, be seen among friends, or be kept private. The company was accused of misleading users about how to keep their transactions private.
The FTC also accused Venmo of misrepresenting how secure its app is, saying the company claimed it used “bank-grade security systems.” The FTC said Venmo violated safeguarding and privacy laws and will be subject to an outside review for compliance every other year.
A PayPal spokeswoman said the settlement carried no monetary fine, while Venmo issued the following statement about the settlement:
“Our users are the focus of everything we do and our goal is to ensure they have a positive experience when using Venmo, an app that is beloved by our customers. We are pleased to conclude this process with the FTC in a cooperative way. This brings to an end the investigation that included focus on Venmo platform issues and practices prior to acquisition by PayPal. Since then, as a core part of PayPal’s and Venmo’s business and operations, we’ve taken steps to significantly strengthen our privacy and data security practices. The company will continue to invest heavily in programs designed to create better user understanding and to enhance privacy. We believe these investments will further support Venmo’s unique user experience and the continuing growth of its role in the lives of our users.”