“Just Send a Venmo!”…To a Collection Agency?
As a result of COVID-19, many businesses are leery of handling cash, credit cards, or debit cards, and consumers feel concerned about using paper money and coins. It is therefore unsurprising that a byproduct of the COVID-19 pandemic is a boom in touchless payment. Peer-to-peer payment platforms, such as Venmo, PayPal, Xoom, and others, allow for the digital transfer of money from one user to another in a quick, convenient, and socially distanced manner. Digital wallet platforms have seen a dramatic increase in personal use throughout the pandemic and are beginning to expand their touchless payment services to brick-and-mortar stores and retailers such as CVS.
On January 21, 2021, Paypal Holdings Inc. received a Civil Investigative Demand ("CID") from the Consumer Financial Protection Bureau ("CFPB") "related to Venmo’s unauthorized funds transfers and collections processes." This is not the first time Venmo’s practices have come under scrutiny from the CFPB. A CID is when the CFPB is in the fact-gathering stage to determine whether Venmo has violated the Fair Debt Collection Practices Act and if enforcement action is necessary.
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