Venmo Scams - Tips for Selling and Buying
Venmo Is Safest With Well-Known People and Brands
Venmo is a great tool for paying friends and paying for certain products and services. 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. The typical security and technology you’d expect from a financial institution protects your account information.
But buying or selling with strangers (online or in person) is risky.
Money in the bank: Venmo has had issues in the past, and it’s always a good idea to monitor your accounts and sign up for alerts so you can instantly review transactions. If money is stolen 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. Add a PIN to your Venmo account for extra protection.
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 costs more to use a credit card, but it helps to protect your daily-use checking account. If a fraudulent charge drains your checking account, you’ve got problems (but a credit card charge can be cleaned up before your next due date).
Better yet, just 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 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 that there’s a problem, the payment will be reversed, and you’re 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 the person might use a stolen credit card number to fund the payment. Eventually, the card’s legitimate owner might file a chargeback, and the payment will be canceled.
This might be surprising because other payment platforms provide consumer (and seller) protections. You might also believe that there’s no way to cancel a payment — because that’s what Venmo says:
"At this time, it’s not possible to cancel a payment that’s been sent in Venmo."
However, payments can be reversed. Your “buyer” doesn’t cancel the payment — they dispute the payment, or somebody else does so after unauthorized activity in their account.
Scams With Venmo
Con artists have learned that they can take advantage of this confusion. Just like with cashier’s check scams, they exploit your assumptions about how money moves: You think the payment is complete, so you give up whatever you’re selling.
The fact is that it takes several days for payments to be processed (for the money to move from a buyer’s bank account or card to Venmo). 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 payment if you accept. At that point, you’ll generally 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 that 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 user agreement 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 the service for business purposes (unless you have a business partnership with Venmo), which they might define as selling to strangers. Some scam victims have received notices from Venmo suggesting that charges were reversed because a transaction appeared to resemble a business transaction.
Don’t expect much help from Venmo if things go sour. In the past, Venmo has told customers 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 him).
For a few horror stories, see Slate’s coverage of Venmo transactions gone bad.
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 may give hackers or stalkers more information than you’d like, or it could reveal more about your finances than you are comfortable with.
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.
Cash: 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: PayPal is a potential alternative, but you need to understand the pros and cons of all of 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 that 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 that the payment will bounce.
Bank payments: 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. Authorized merchants include large brands like White Castle, Delivery.com, and Gametime. 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).