CFPB Investigating Venmo’s Funds Transfer and Debt Collection Policies

Troutman Pepper

In a recently filed Form 10-K, PayPal Holdings, Inc. (PayPal) announced that it received a Civil Investigative Demand (CID) from the Consumer Financial Protection Bureau (CFPB) on January 21 “related to Venmo’s unauthorized funds transfers and collections processes, and related matters.” PayPal owns and operates Venmo as part of its digital wallet portfolio.

While the CID is not publicly available, The Wall Street Journal reported in March 2019 that “[i]n a bid to curb losses on its platform, Venmo is threatening to sic debt collectors on some users who carry negative balances in their accounts, according to customer-service emails reviewed by The Wall Street Journal. Venmo also recently amended its user agreement to give itself the power to recover money its customers owe by seizing it from their other accounts at PayPal.”

This investigation may be our first sign of a more aggressive CFPB impacting the payments industry. In a recent report titled, “Federal Policy Outlook 2021,” Troutman Pepper Strategies predicts that the “Biden-run CFPB will try to strengthen oversight of lending, credit, and target predatory lending.”

While collection practices may be the primary subject of the CFPB’s CID, keep in mind that these types of federal investigations may create unwanted exposure to similar issues for other digital wallet companies and related products. In addition to the risk of federal inquiries, this type of scrutiny could also draw attention from state attorneys general that actively enforce consumer protection statutes, like debt collection or unfair or deceptive acts and practices laws. We will continue to monitor any developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Troutman Pepper | Attorney Advertising

Written by:

Troutman Pepper

Troutman Pepper on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.