FTC Investigating Venmo for ‘Deceptive or Unfair Practices’
The Federal Trade Commission (FTC) is investigating Venmo, the popular P2P payment app owned by PayPal Inc. In its quarterly earnings report, PayPal said it received a Civil Investigative Demand (CID) from the FTC on March 28, as part of an investigation into whether PayPal through its Venmo service is “engaged in deceptive or unfair practices,” according to the filing. The CID requests PayPal provide documents and answer questions about Venmo, which could potentially lead to an enforcement action and/or consent orders—and could ultimately result in changes to how Venmo operates, Pay Pal said.
“As a global payments provider, we are completely aligned with regulators in their efforts to ensure that consumers have positive experiences when using our services,” said Amanda Christine Miller, global head of corporate media relations, PayPal. “We consult and collaborate with regulators and work hard to comply with laws and regulations in the markets where we do business, around the world. We are cooperating fully with the Federal Trade Commission to address their requests for information.”
The news came amid an otherwise positive earnings report for PayPal, which reported quarterly net income of $2.54 billion, compared with $2.14 billion a year earlier. Payments volume surged more than 50 percent over last year, with much of that growth coming from the fast-growing Venmo. Launched in 2009, Venmo came under the PayPal umbrella in 2013, when PayPal acquired mobile-focused payments processor Braintree. Venmo has since become one of the dominant P2P money transfer services in the U.S. market, processing more than $3.2 billion in payments during the first quarter of 2016, an increase of more than 150 percent from the same quarter of 2015, PayPal revealed in its earnings filing. However, most Venmo transactions don’t earn the company any fee revenue, as debit and bank account transfers are free for users, and only credit card transfers incur a fee. Earlier this year, PayPal unveiled a plan that could more effectively monetize Venmo by offering users of third-party apps to make in-app payments via Venmo. App makers would be charged a fee for each transaction made with the service, known as Pay with Venmo, which is set to launch by the end of this year.