Venmo, a PayPal payment app, is under investigation by U.S. consumer watchdog
Venmo, a mobile payment service owned by PayPal, is under investigation by U.S. consumer watchdog for unauthorized fund transfers and collections processes, according to a report from Reuters.
On Friday, PayPal Holdings Inc announced that it received a civil investigative demand from the U.S. Consumer Financial Protection Bureau related to its app Venmo’s alleged unauthorized fund transfers and collections processes. The payment giant said it’s cooperating with the organization.
Venmo became part of PayPal after the payment giant acquired Braintree in 2013 for $800 million. In 2012, Venmo was bought by Braintree, and then in 2013 Braintree was acquired by PayPal. Venmo is a popular mobile app for person-to-person payments in the United States. In the fourth quarter, Venmo processed about $47 billion in total payments volume, up 60% from last year.
Venmo started out in 2009 as a way for founders Andrew Kortina and Iqram Magdon-Ismail to pay each other without having to exchange cash or write a cheque. The app uses peer-to-peer technology to send money online, but it isn’t a holding account. Users connect a debit or credit card to the app, which it can use to send and withdraw money from Venmo.
Venmo, a competitor to apps like Cash, is restricted to personal use and exists partly as a digital wallet, and partly a social media feed. Venmo account holders can transfer funds to others via a mobile phone app; both the sender and receiver have to live in the U.S.