Venmo instant transfer fees lawsuit investigation

Shamis & Gentile P.A., one of the nation's premier class action law firms specializing in arbitration cases, is investigating potential claims against Venmo.

If you have a dispute with the company, you may be eligible for compensation through arbitration.

What is Venmo?

Venmo is a peer-to-peer digital payment platform that allows people to send and receive money using a mobile app or website. Founded in 2009, the service originally operated through text messages before evolving into a smartphone-based “social payments” app.

Users can connect their Venmo accounts to bank accounts, debit cards or credit cards, maintain a Venmo balance, and transfer funds to their bank.

In 2013, Venmo was acquired by PayPal Inc., a large online payments company.

Why is Venmo being Investigated?

The investigation focuses on whether Venmo’s practices have harmed consumers in several key areas:

Misleading information about access to funds

According to a 2018 Federal Trade Commission complaint and settlement, Venmo allegedly led users to believe that once they received a payment notification, the money was fully available and could be transferred to their bank accounts “overnight” or within a short time frame. In reality, Venmo often waited until a user tried to transfer funds out before reviewing the transaction for fraud, insufficient funds or other issues.

This review process allegedly resulted in:

• Delays in transfers to bank accounts
• Frozen accounts
• Reversed transactions after users believed they had been paid

Many consumers reported that these practices caused serious financial hardship, including being unable to pay rent or bills even though their Venmo balance appeared to show sufficient funds.

Freezing and holding consumer funds

Numerous consumers have publicly reported that Venmo:

• Froze their accounts with little or no explanation
• Held funds for extended periods, sometimes up to 180 days or longer
• Requested extensive documentation, then still refused to release funds
• Closed accounts and stated that funds might not be returned

Some users reported losing access to thousands of dollars, including money needed for rent, tuition or business expenses. Others described situations where Venmo allegedly kept funds after closing accounts, citing “terms of service” or internal policies while refusing to provide clear reasons or a meaningful appeal process.

Although PayPal and Venmo entered into an FTC settlement in May 2018 that required changes to certain practices, consumers have continued to report problems with frozen accounts, withheld funds and unresolved disputes in the years since.

Your Rights and Next Steps

People who have been harmed by Venmo’s practices may have legal rights and potential claims, even if the company’s terms of service include an arbitration clause and class action waiver. Arbitration is one way to enforce those rights on a large scale.

Potential consumer claims

Depending on the facts of each case and applicable state law, potential claims may include:

• Deceptive or unfair business practices
• Misrepresentation about when funds are available or transferable
• Wrongful freezing or withholding of consumer funds
• Failure to follow proper procedures when closing accounts
• Violations of financial privacy or data security obligations
• Breach of contract or breach of the implied covenant of good faith and fair dealing

Consumers who may be affected include those who:

• Had their Venmo accounts frozen or closed without a clear, specific explanation
• Had funds held for an extended period (for example, 180 days or more)
• Were told their money would be released after a certain time, then did not receive it
• Lost money when Venmo reversed transactions after goods, tickets or services were already provided
• Suffered overdraft fees, late fees, eviction risk or other financial harm because expected Venmo funds were not available

What consumers can do now

Anyone who believes they were harmed by Venmo should consider gathering these records:

• Screenshots of the Venmo app showing balances, freezes or error messages
• Emails or messages from Venmo about account reviews, holds, closures or security issues
• Bank statements showing transfers, failed transfers, overdrafts or related fees
• Any written notes of phone calls or chats with Venmo support
• Dates when funds were expected and when (or if) they were actually received
• Bills, rent, tuition or other obligations that could not be paid because of missing funds

The team of lawyers working with Shamis & Gentile P.A. is reviewing potential Venmo cases to determine whether consumers may be eligible to participate in arbitration.

There is no upfront cost to have a claim evaluated, and legal fees are usually handled on a contingency basis, meaning the legal team is paid only if there is a recovery.

If Venmo has frozen or closed an account, held funds, or reversed payments, it may be possible to take action.

To find out if you may qualify for a potential Venmo arbitration claim, please complete the form on this page.