PayPal settles Venmo disclosure complaints with the FTC
The Federal Trade Commission and PayPal have reached a settlement over claims PayPal misled consumers about transfers.
In its original complaint, the government accused PayPal of telling users of its Venmo P-to-P transfer app that funds credited to Venmo balances could be transferred to external bank accounts without disclosing the transactions were still under review and could be frozen or removed.
The FTC also alleges Venmo misrepresented its ability to control the privacy of transactions and security protections, and violated parts of the Gramm-Leach-Bliley Act that address safeguards and privacy.
The lack of disclosure resulted in some consumers saying they could not pay rent or other bills because they could not transfer funds in the manner that Venmo represented. Venmo delayed withdrawal of funds or reversed transactions after initially saying the funds were available.
As part of the settlement, Venmo is prohibited from misrepresenting material restrictions on the use of its service, or the control provided by privacy settings and extent of its security protections. It is also required to obtain biennial third-party assessments of Gramm-Leach-Bliley rules for the next 10 years.