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PayPal settles FTC charges over alleged failed Venmo disclosures

PayPal Holdings Inc. reached a settlement with the Federal Trade Commission for allegedly misleading users of its peer-to-peer payments app Venmo regarding the privacy of their transactions and failing to provide adequate disclosures about availability of funds transferred into a Venmo account.

The FTC said consumers claimed Venmo sometimes delayed the withdrawal of funds or reversed the underlying transaction after notifying them that funds were available. The actions caused many consumers to experience financial hardship because they could not transfer money as promised by Venmo, according to the agency.

The FTC also charged that Venmo misrepresented the actions necessary to keep transactions private and failed to disclose these steps to consumers.

As part of the proposed settlement with the FTC, Venmo is prohibited from misrepresenting the extent of control provided by privacy settings and the extent to which Venmo implements a certain level of security. The payment processor is also required to issue certain disclosures to its users about the app's transaction and privacy practices.