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The FTC is investigating Venmo over 'deceptive or unfair practices'

The FTC is investigating Venmo over 'deceptive or unfair practices'

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Venmo, the hugely popular peer-to-peer payment service owned by PayPal, is under investigation by the Federal Trade Commission. Its parent company acknowledged the situation today in an SEC filing. "On March 28th, 2016, we received a Civil Investigative Demand (CID) from the Federal Trade Commission as part of its investigation to determine whether we, through our Venmo service, have been or are engaged in deceptive or unfair practices in violation of the Federal Trade Commission Act," the filing reads.

"The CID requests the production of documents and answers to written questions related to our Venmo service. We are cooperating with the FTC in connection with the CID." PayPal warns that depending on where the FTC goes with the investigation, there could be some trouble ahead, ranging from legal fees to potential changes in the way that Venmo functions. That's usually not a good thing when you're dealing with a hit app.

The CID could lead to an enforcement action and/or one or more consent orders, which may result in substantial costs, including legal fees, fines, penalties, and remediation expenses and actions, and could require us to change aspects of the manner in which we operate Venmo.

PayPal's earnings, reported yesterday, bested Wall Street expectations. But the FTC's scrutiny is sure to be an unwelcome development for the company. The investigation comes as Venmo continues to rocket upward in popularity; in January, the company announced it'd crossed the incredible milestone of $1 billion in payments in a single month. Venmo has previously claimed that it screens all transactions — yes, all of those silly payment notes you fill in — in accordance with federal law. In the United States, Venmo's peer-to-peer payment competitors include Square Cash, Google Wallet, and Facebook Messenger, but the PayPal-owned product enjoys the most success of any of them.