PayPal Holdings Inc. said U.S. regulators are investigating the company’s Venmo free peer-to-peer payment service in connection with potential unfair trade practices.

PayPal said it received a civil investigative demand on March 28 from the Federal Trade Commission for documents related to Venmo. The probe focuses on whether the electronic payments company, through Venmo, engaged in unfair or deceptive trade practices, the company said Thursday in a regulatory filing.

The investigation “may result in substantial costs, including legal fees, fines, penalties and remediation expenses and actions and require us to change aspects of the manner in which we operate Venmo,” the company said in the filing.

PayPal said it is cooperating with the FTC, but declined to give further details about the probe.

“As a global payments provider, we are completely aligned with regulators in their efforts to ensure that consumers have positive experiences when using our services,” said Amanda Miller, a PayPal spokeswoman. “We consult and collaborate with regulators and work hard to comply with laws and regulations in the markets where we do business around the world.”

Jay Mayfield, a spokesman for the FTC, confirmed the investigation, but declined to comment further.

PayPal on Wednesday said it added 4.5 million new customer accounts in the first quarter while reporting profit and sales that topped analysts’ estimates. Total payment volume on Venmo more than doubled to $3.2 billion in the quarter from a year earlier, the company said.

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