Introduction
If you’ve ever used Venmo to split a bill or pay a friend, you might be in for a surprise. A recent settlement involving Venmo has led to payouts of up to $156 for some users. This development stems from a class-action lawsuit that accused Venmo of misleading practices regarding fund transfers and privacy settings. Let’s dive into the details of this settlement and understand what it means for you.
What Sparked the Settlement?
The Federal Trade Commission (FTC) raised concerns about Venmo’s practices, alleging that the company misled users about the availability of funds and the privacy of their transactions. Specifically, users were notified that money had been credited to their Venmo balances and was available for transfer to external accounts. However, Venmo failed to disclose that these funds could be frozen or removed based on transaction reviews, leading to potential financial hardships for users .
The Privacy Concerns
Beyond fund availability, the FTC also highlighted issues with Venmo’s privacy settings. By default, all peer-to-peer transactions on Venmo were displayed on a public feed, including the names of the payer and recipient, and the accompanying message. While users could adjust their privacy settings, the process was not straightforward, and many transactions remained visible despite users’ attempts to keep them private .​
The Settlement Details
As a result of these allegations, Venmo reached a settlement with the FTC. Under the terms of the settlement, Venmo is prohibited from misrepresenting any material restrictions on the use of its service, the extent of control provided by any privacy settings, and the extent to which Venmo implements or adheres to a particular level of security. Additionally, Venmo is required to make certain disclosures to consumers about its transaction and privacy practices and is subject to biennial third-party assessments of its compliance for 10 years .​
The $156 Payout: What’s That About?
While the FTC settlement did not include monetary compensation for users, a separate class-action lawsuit against Plaid, a financial technology company that connects users’ bank accounts to financial apps like Venmo, resulted in a $58 million settlement. Plaid was accused of collecting more financial data than necessary from users. Eligible users who had linked their bank accounts to apps using Plaid between January 1, 2013, and November 19, 2021, could receive payouts, with some users reportedly receiving up to $156 .​
How to Check If You’re Eligible
If you used Venmo or other financial apps connected through Plaid during the specified period, you might be eligible for a payout. Some users received settlement notices by mail or email. Even if you didn’t receive a notice, you could still be a class member and eligible to submit a claim. The deadline to file a claim was April 28, 2022, but it’s worth checking the settlement website or contacting the settlement administrator for more information.​
Conclusion
The Venmo settlement and the associated Plaid class-action lawsuit underscore the importance of transparency and user privacy in financial technology services. While the settlements aim to address past issues, they also serve as a reminder for users to stay informed about the terms and conditions of the services they use. If you believe you were affected, it’s advisable to check your eligibility for any potential compensation and stay updated on any further developments.​
FAQs
Q1: What was the main issue with Venmo’s practices?
The FTC alleged that Venmo misled users about the availability of funds and the privacy of their transactions, leading to potential financial hardships and privacy concerns.​
Q2: Did the FTC settlement include monetary compensation for users?
No, the FTC settlement did not include monetary compensation. However, a separate class-action lawsuit against Plaid resulted in a $58 million settlement for eligible users.​
Q3: How do I know if I’m eligible for the Plaid settlement payout?
If you linked your bank account to Venmo or other financial apps using Plaid between January 1, 2013, and November 19, 2021, you might be eligible. Check the settlement website or contact the settlement administrator for more information.
Q4: What steps has Venmo taken following the settlement?
Venmo is required to make clear disclosures about its transaction and privacy practices and undergo biennial third-party assessments of its compliance for 10 years.​
Q5: How can I protect my privacy when using financial apps?
Regularly review and adjust your privacy settings, stay informed about the app’s terms and conditions, and monitor your account for any unusual activity.