Attorney General Ken Paxton today announced a settlement with PayPal Inc. regarding its Venmo mobile phone application (“app”). This agreement resolves the state’s legal action against PayPal, which since 2013 has been the parent company of Venmo, a popular money transfer application and social network that allows users to electronically pay others by using linked bank accounts or credit cards.
“Innovation in payment processing technology benefits consumers throughout Texas,” Texas Attorney General Ken Paxton said. “However, it is important that businesses remain aware of the potential consequences regarding their users’ privacy and security so that they can better protect consumers.”
The Texas Attorney General’s Consumer Protection Division conducted an investigation for potential violations of the Texas Deceptive Trade Practices Act (DTPA) and found a number of issues regarding the safety and security of the Venmo app. According to investigators, Venmo used consumers’ phone contacts without clearly disclosing how the contacts would be used, did not clearly disclose how consumers’ transactions and interactions with other users would be shared, and misrepresented that communications from Venmo were actually from particular Venmo users. As a result, consumers may have publically exposed private information regarding their payments. In January 2016 alone, Venmo processed $1 billion in transactions.
As part of its settlement, PayPal agrees that its Venmo app will improve disclosures to consumers regarding privacy and security. Paypal also agrees to better inform users of the safeguards available on its app, and ensure consumers understand who will be able to view their transaction information. The settlement also includes a payment of $175,000 to the State of Texas.
For a copy of agreement click here: