Feds Eye Venmo’s Debt Collection Practices
The popular mobile payment service Venmo is being investigated by a government consumer watchdog agency for matters involving unauthorized funds transfers and collections processes, said parent company PayPal.
PayPal said in a filing with the Securities and Exchange Commission that it received a Civil Investigative Demand letter from the Consumer Financial Protection Bureau (CFPB) on Jan. 21.
While neither party provided details on the investigation, Venmo has come under scrutiny for its debt collection practices in the past. The company has threatened to unleash debt collectors on customers who carry negative balances in their accounts of as little as $7, and even on customers who were victims of scammers, the Wall Street Journal reported in 2019, based on emails from Venmo’s customer service team.
The company has continued to issue collection threats to scam victims even during the pandemic, according to another investigative report by the Wall Street Journal in September.
PayPal said it was cooperating with the CFPB’s investigation.
“Venmo remains deeply committed to its compliance obligations and the company works closely with regulators around the world to adhere to all applicable rules and regulations in the markets in which we operate,” a PayPal spokesperson said in an email. “Venmo will continue to work productively with the CFPB to provide information, as requested, on our practices and processes.”
The letter arrived the day after President Joe Biden took office and Kathy Kraninger, the CFPB’s director appointed by his predecessor, resigned and was replaced by Biden acting director appointee Dave Uejio. Consumer advocates expect the CFPB to be much more aggressive now that the Democrats are once again in charge of the federal agency, but whether the Venmo investigation was related to the change in leadership was unclear. The CFPB declined to comment on an ongoing investigation.