FTC tells Venmo: be more transparent

Venmo, the payments app owned by PayPal, has reached a settlement with the Federal Trade Commission over charges that it misled users about some of its practices.

Under the settlement, Venmo cannot misrepresent restrictions on the use of its service, what privacy controls its users have or the extent of security it provides to users, the FTC announced earlier this week.

Venmo, which allows people to pay one another for meals, rent and more via a mobile app, had been accused of not making it clear to its users that their fund transfers might be delayed.

'Consumers suffered real harm when Venmo did not live up to the promises it made to users about the availability of their money,” Acting FTC Chairman Maureen K. Ohlhausen said in a statement.

Venmo also faced allegations related to its privacy settings. The app has a social-networking component - transactions between users can be publicly viewable on a feed, be seen among friends or be kept private.

The company was accused of misleading users about how to keep their transactions private.

In addition, the FTC accused Venmo of misrepresenting how secure its app is, saying the company 'at least until 2015” claimed it used 'bank-grade security systems.”

The FTC said Venmo violated safeguarding and privacy laws, and will be subject to an outside review for compliance every other year.

A PayPal spokeswoman pointed out Wednesday that the settlement carried no monetary fine.

However, according to the FTC's settlement announcement, each violation of its orders - which are scheduled to be finalized after March 29 - carries a 'a civil penalty of up to $41,484.”

PayPal bought Venmo in 2013.