PayPalHoldings Inc. said the Federal Trade Commission is investigating PayPal'sVenmo service over possible unfair trade practices.

The investigation focuses on whether Venmo engaged in deceptiveor unfair practices, violating the Federal Trade Commission Act, according to aForm 10-Q filed April 28. The regulator sent on March 28 a civil investigativedemand to PayPal, asking the company to submit documents and answer writtenquestions related to the service.

The civil investigative demand "may result insubstantial costs, including legal fees, fines, penalties, and remediationexpenses and actions, and could require us to change aspects of the manner inwhich we operate Venmo," PayPal said in the filing.

PayPal said it is cooperating with the FTC.