A settlement reached between a federal U.S. regulator and peer-to-peer payment firm Venmo, now a subsidiary of PayPal, sends a “strong message” to the industry about the importance of user protection, legal experts have warned.
Allegations set out by the Federal Trade Commission (FTC) hinged on flaws in Venmo’s payment notification procedure; the regulator found some users would be told funds had been credited to their account balance even though the transaction was still subject to review.
That led to situations where customers either had their accounts frozen or payments reversed when attempting to make transfers to an external bank account.
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