Payment processor PayPal Holdings (NYSE:PYPL) has indicated that it has received a civil investigative demand (CID) from the consumer Finance Protection Bureau regarding how its money transfer app Venmo handles collections. The company said that it received the CID on January 21, 2021, concerning unauthorized money transfers and collections related to Venmo.

CFPB investigating PayPal’s Venmo app regarding collections

Normally a CID is a request for documents and records or information related to an investigation. The company said that it is cooperating with the CFPB to provide requested information on the app’s processes and practices. PayPal also indicated that Venmo is committed to compliance obligations and will cooperate with regulators globally.

If a Venmo user account gets overdrawn it may be referred to collections. Although within app money transfers can occur immediately, often the money doesn’t leave the bank account of the user for almost 24 hours. As a result, Venmo will cover the payment amount in the interim and when the one’s account doesn’t have funds available when the bank processes the payment, Venmo will try to recoup the funds it covered.

In the past Venmo has been in the spotlight regarding its collecting practices. In 2019 a report by the Wall Street Journal indicated that the company was pursuing even co0llection against users that may have been scam victims. Equally, last year at the height of the pandemic the company was accused of pursuing collections at the same rate.

Venmo usage grew during the pandemic

However, according to Venmo, it is acting within its user agreements regarding collections and it complies with laws when it pursues collections. Over the pandemic, the app saw an increase in user activity as more people turned to use digital payment systems. PayPal posted a net income of $1.57 billion in its Q4 which is a $507 million increase from the previous year. Also, active user accounts increased 32T% in 2002 to almost 70 million. The company’s CEO indicated that they expect Venmo to generate $900 million in revenue this year.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg,,, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.