Saturday, April 30, 2016

Venmo Under Investigation by FTC

Venmo, the popular mobile payment app owned by PayPal, revealed in an SEC filing that the Federal Trade Commission (FTC) is investigating Venmo surrounding possible deceptive or unfair trade practices.  Venmo revealed that it had received a Civil Investigation Demand in March from the FTC requesting documentation and answers to interrogatories surrounding Venmo's services. 

Venmo indicated that it is cooperating with the FTC, but informed investors that the investigation could potentially lead to enforcement action, operational changes, or substantial costs.  Venmo is a free app allowing it's users to transfer money online to other Venmo users.  Paypal acquired Venmo in 2013.  In 2015, Venmo processed $7.5 billion in payments/transfers

1 comment:

  1. Depending on the outcome of this FTC investigation, it will be interesting to see if any derivative actions are filed to recover potential penalties. If it is determined that the board either intentionally approved these alleged practices or failed to have appropriate monitoring procedures then there is likely a viable claim. I imagine there were many attorneys who ran out to get their shareholder-plaintiff lined up when this news came out. Although that practice has its downsides, if the only penalty directors have to pay is a fine that comes out of the company, and not their own pockets, then the deceptive or unfair practices won't have an end. Derivative actions are the best tool a shareholder has for keeping the directors accountable.

    Ryan Holden