WASHINGTON (Legal Newsline) — The Federal Trade Commission (FTC) announced May 24 that it approved a settlement with PayPal Inc. that resolves allegations the company’s peer-to-peer payment service, Venmo, misled consumers about how transfers to external bank accounts worked.
Venmo allegedly failed to disclose to consumers that when it notified them of Venmo funds, it could freeze those funds or remove them based off of internal reviews of the underlying transactions. Consumers were allegedly also misled about the privacy involved in their peer-to-peer transactions. The FTC claimed that Venmo violated the Gramm-Leach-Bliley Act’s Safeguards and Privacy Rules.
To settle the allegations, Venmo agreed to a ban on misrepresenting any material restrictions on the use of its service, its privacy settings and the extent of its security. Additionally, Venmo is prohibited from violating the Privacy Rule and the Safeguards Rule, and must undergo biennial third-party assessments of its compliance with the order.
The FTC voted 5-0 to approve the final complaint and order, and to provide responses to the comments the agency received during the public comment phase.