Venmo Scams: Tips for Selling and Buying Safely
Venmo Is Safest With Well-Known People and Brands
Venmo is an excellent tool for paying friends and buying products and services from select merchants. Payments are fast and easy, and the social element can add some fun to the process. But as with any payment method, you need to be aware of the limitations—and potential risks—of using the service.
Is It Safe?
When dealing with friends or paying a reputable business, Venmo is (for the most part) safe, although it has had issues in the past about misrepresenting its service. The company protects your account information with the typical security features and technology you’d expect from a financial institution. But buying or selling with strangers, whether online or in-person, is risky. Venmo offers no buyer or seller protection.
Money in the Bank
Whenever your money is at stake, it’s a smart idea to monitor your accounts and sign up for alerts so you instantly learn about new transactions. If somebody steals money from your bank account, you might be protected under federal law, but you have to act fast to benefit from that protection. Notify Venmo and your bank immediately if you see something suspicious.
Safest Funding Methods
The safest way to use Venmo is to use a credit card as your primary funding method (as opposed to using a debit card, or a direct link to your bank account). It may cost more money to use a credit card, but it helps protect your daily-use checking account. If a fraudulent charge drains your checking account, you’ve got immediate cash-flow problems. On the other hand, you can clean up a credit card charge in less than two billing cycles.
An even better approach might be to leave a small amount in your Venmo account and spend from your Venmo balance instead of drawing from your checking account or credit card.
Getting Paid (Selling With Venmo)
Receiving payments is risky, no matter what tool you use. To manage that risk, only accept payments from people you know and trust—that’s what Venmo is designed for. Venmo is not meant to be used for your small business or informal sales on Craigslist.
Unfortunately, Venmo payments you receive can be reversed by the company after they hit your account. When you receive a payment, it looks as if the transaction is complete. The money appears in your Venmo account instantly, and you might even be able to use the funds. However, that money is only made available under the assumption that everything is fine.
If it turns out there’s a problem, the payment will be reversed, and you’ll be responsible for that money. If you haven’t used the funds, Venmo will take the money back. If you already spent the money, you’ll need to replace it.
What could go wrong? It’s possible that the person who paid you will file a claim with Venmo, or even use a stolen credit card number to fund the payment. Eventually, the card’s legitimate owner might complain, and the payment will be canceled.
This might surprise you because other payment platforms provide consumer (and seller) protections, but Venmo doesn’t. You might also believe it’s impossible to cancel a payment—because that’s what Venmo says on its website: "At this time, it’s not possible to cancel a payment that’s been sent to a registered user in Venmo."
However, payments can be reversed. Your buyer doesn’t "cancel" the payment. They may "dispute" the payment—or somebody else does after finding unauthorized activity in their account.
Scams With Venmo
Con artists discovered they can take advantage of this confusion. Just like with cashier’s check scams, they may exploit your assumptions about how money moves. You think the payment is complete, so you give up whatever you’re selling.
It takes several days for payments to be processed (for the money to move from a buyer’s bank account or card to Venmo unless the recipient pays a fee to speed things up). But payments appear to be instant. In most cases, they might as well be, because there’s no fraud going on. Venmo tells you that you just got paid and shows a little plus sign that suggests the funds are in your account instantly.
In a typical Venmo scam, a “buyer” contacts you about something you’re selling on Craigslist. They ask to pay with Venmo and promptly make the payment if you accept. At that point, you provide whatever you’re selling (whether you ship it, hand it over in-person, or transfer Bitcoin to the buyer), thinking all is well. After a few days, Venmo reverses the transaction, and your buyer is nowhere to be found.
In addition to losing your merchandise, if you spend that money, you’ll have to replace the money you thought you received (by transferring it back into Venmo from your bank account, for example).
Venmo generally does not offer assistance in cases like the scam described above. The company specifies that the service is for “payments between friends and people who trust each other,” and that there is no buyer or seller protection.
Venmo also prohibits using their personal service for business purposes unless you have a business partnership with Venmo.
Don’t expect much help from Venmo if things go sour. The company suggests that customers try to work things out with whoever “paid” and took merchandise. Of course, thieves won’t cooperate, which leaves you with few options besides calling the police or bringing legal action against the buyer (if you can find them).
If you’re especially privacy-conscious, avoid publishing your activity to the feed. In most cases, there’s nothing to worry about. However, depending on your situation, you may prefer to keep your transactions private. The feed provides helpful information to hackers or stalkers, or it could reveal more about your finances than you are comfortable revealing. Follow the path as depicted by the red boxes above to make your transactions visible only to you and your recipient.
Alternatives to Venmo
What can you do to stay safe? Don’t use Venmo for anything except payments among friends and payments to approved merchants.
If you’re selling online or on Craigslist, find alternative ways to get paid. Cash is always a good option when dealing with strangers (just be safe when you’re out and about—inspect the bills, pick a good location, don’t flash the money around, and get that cash in the bank as soon as possible).
PayPal is a potential alternative, but you need to understand the pros and cons of all your options. PayPal tends to side with the customer if there’s a dispute, so you still risk chargebacks from thieves (although you might prevail in the dispute process if you can prove you followed all of PayPal’s rules).
Checks and Money Orders
You could also accept old-fashioned paper forms of payment from strangers. However, those payments can also be used fraudulently. You’ll want to verify funds if you’re dealing with a stranger, and even then, there’s a chance the payment will bounce.
For large-dollar transactions, it might make sense to go to your buyer’s bank (if that’s practical). Either go through the teller line with them or watch closely if they’re getting a cashier’s check for payment. You can also request a wire transfer, but that can be risky for other reasons. You’ll have to provide your bank routing and account numbers, which can later be used to draw funds from your account.
Buying With Venmo
Venmo was originally built for person-to-person payments. But it can be used to pay for purchases if the vendor is authorized with Venmo. But if you pay somebody selling on Craigslist or eBay, you’re operating outside of Venmo’s rules. There is no buyer protection, so you’ll lose money if the seller gives you fake products (or nothing at all).
Federal Trade Commission. "FTC Gives Final Approval to Settlement With PayPal Related to Allegations Involving Its Venmo Peer-to-Peer Payment Service." Accessed Jan. 10, 2020.
Venmo. "Security." Accessed Jan. 10, 2020.
Consumer Financial Protection Bureau. "How Do I Get My Money Back After I Discovered an Unauthorized Transaction or Money Missing From My Bank Account?" Accessed Jan. 10, 2020.
Federal Trade Commission. "Disputing Credit Card Charges." Accessed Jan. 10, 2020.
Venmo. "Money in Your Venmo Account and Venmo Balance." Accessed Jan. 10, 2020.
Venmo. "Cancel Payment." Accessed Feb. 6, 2020.
Venmo. "I See Venmo Charges on My Statement but I Don’t Have a Venmo Account!" Accessed Jan. 20, 2020.
Venmo. "What Is Venmo?" Accessed Jan. 10, 2020.
Venmo. "Tap Into Venmo’s Social Commerce Platform." Accessed Feb. 6, 2020.
Venmo. "User Agreement." Accessed Jan. 10, 2020.
Federal Trade Commission. "Anatomy of a Fake Check Scam." Accessed Jan. 10, 2020.