PayPal Says Venmo Being Probed by Consumer-Banking Watchdog
(Bloomberg) -- PayPal Holdings Inc. said regulators are investigating the company's popular person-to-person payments app Venmo.
The Consumer Financial Protection Bureau is probing Venmo's processes for collections and unauthorized fund transfers, PayPal said in an annual regulatory filing. The payments giant said that the agency requested documents and answers to written questions in a civil investigative demand PayPal received on Jan. 21.
“We are cooperating with the CFPB,” PayPal said in the filing Friday. Tia Elbaum, a spokesperson for the bureau, declined to comment on its investigation.
The company's shares fell 1.3% to $266.91 at 11:09 a.m. in New York. They have gained 14% this year, more than the 3.8% increase for the S&P 500 Information Technology Sector Index.
PayPal has faced criticism in recent years for engaging in collections or debiting accounts when users turn up with negative balances in their Venmo wallets.
“If you have amounts past due, you should confirm that your payment methods contain funds sufficient to cover any amounts past due,” Venmo said in its user agreement. “This will help you avoid overdraft or other fees your financial institution may charge.”
The CFPB is led by acting director Dave Uejio, who was named to the position by President Joe Biden on Jan. 20.
Read more: PayPal's Revenue Surges in Strong Finish to Blockbuster Year
©2021 Bloomberg L.P.
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