Venmo’s Debt-Collection Practices Probed by CFPB

Venmo’s debt-collection tactics have come under scrutiny in the past. The company has threatened to dispatch debt collectors on users who overdraw their accounts, even when those users are victims of scams, The Wall Street Journal previously reported. Venmo also previously amended its user agreement to give itself the power to recover money its customers owe by seizing it from their other accounts at PayPal, the Journal reported at the time.

The company continued aggressive collection efforts during the coronavirus pandemic, the Journal previously reported.

PayPal said the CFPB’s request came on Jan. 21. President Joe Biden was inaugurated the day before. The bureau, which in many ways grew less forceful under the Trump administration, is expected to more strictly enforce consumer protections under the Biden administration.

A Venmo spokeswoman said in a statement that the company “remains deeply committed to its compliance obligations and the company works closely with regulators around the world to adhere to all applicable rules and regulations in the markets in which we operate.”

Digital-payments companies took a hit in the pandemic’s early days when fewer people were using the services to split bills at bars and restaurants. Companies including Venmo pivoted to new services, including letting customers direct-deposit their stimulus checks into their Venmo accounts.

By last summer, the pandemic had supercharged digital payments, which were popular with customers stuck at home or wary of using cash and cards because of the virus. About $47 billion was transferred via Venmo in the fourth quarter, roughly a 60% increase from the year before.

—Peter Rudegeair contributed to this article.

Write to Orla McCaffrey at [email protected]