Payment Methods

Venmo Pursues Customers With Negative Balances

Venmo, the digital money transfer company owned by PayPal, is going after consumers who have a negative balance in their accounts.

According to a report in The Wall Street Journal, citing customer service emails reviewed by the paper, Venmo is threatening to involve debt collectors to pursue customers with negative balances. It also recently overhauled its user agreement to state that it can recover money owed from customers from their other PayPal accounts.

The move comes as the unit of PayPal continues to suffer from losses. It also underscores the challenges that banks and money transfer companies face in making payments faster and more convenient while also earning a profit.

According to the report, the majority of the $62 billion in Venmo’s payment activity is derived from money transfers, for which the company does not charge a fee. Instead, Venmo assumes the cost of processing them, which hampers its ability to earn profits.

Amid its latest actions to recover the money it is owed, Venmo is facing a backlash among customers who argue that the company is going after the wrong users. Customers owing as high as $3,000 down to as little as $7 were threatened with debt collection efforts. The paper reported that some of the customers who received threats from collectors had negative balances only because someone had taken over their account, or because they were tricked into sending a payment to a scammer.

Venmo declined to disclose how many times it has sent out collection letters, or whether it followed through on them. A spokeswoman did confirm Venmo changed its user agreement in order to access other PayPal accounts. “These changes, which have been a PayPal policy for a while, are a result of our efforts to drive policy consistency across platforms,” the spokeswoman told the news wire in an email.

——————————

PYMNTS LIVE ROUNDTABLE: TUESDAY, JULY 14, 2020 AT 12:00 PM (ET)

Digital transformation has been forcefully accelerated, but how does that agility translate into the fight against COVID-era attacks and sophisticated identity threats? As millions embrace online everything, preserving digital trust now falls mostly on banks and FIs. Now, advances in identity data and using different weights on the payment mix afford new opportunities to arm organizations and their customers against cyberthreats. From the latest in machine learning for fraud and risk, to corporate treasury teams working in new ways with new datasets, learn from experts how digital identity, together with advances like real-time payments, combine to engender trust and enrich relationships.

TRENDING RIGHT NOW