Venmo has become one of the most popular peer-to-peer payment apps, allowing users to easily transfer money between friends or pay for goods and services. With its social feed and emoji-filled transactions, Venmo aims to make payments fun and simple.
However, the casual nature of Venmo has led some users to pay or charge strangers through the app. This raises the question: Is it actually safe to receive money on Venmo from people you don’t know?
The Risks of Accepting Venmo Payments From Strangers
There are several risks associated with accepting Venmo payments from strangers:
- Fraud: The stranger could be using a stolen credit card or bank account. If the actual owner reports the transaction as fraudulent, Venmo will take the money back from your account.
- Scams: The stranger may be trying to scam you by sending an unauthorized payment and asking for the money or item back. This is a way for scammers to essentially launder money.
- Wrong recipient: The stranger may have accidentally sent the money to the wrong person. They can request the charge be reversed.
- Ban or frozen account: Venmo may ban your account or freeze the funds if they detect suspicious activity related to strangers sending you money.
Chargebacks
One of the biggest risks with receiving payments from strangers on Venmo is the possibility of a chargeback. If the money was sent from a stolen credit card or bank account, the owner can request their bank or card issuer reverse the charges.
Venmo will then take the disputed funds back from your account. Even if you’ve already withdrawn or spent the money, Venmo can put your balance in the negative if a chargeback occurs.
Reversed Payments
In some cases, the sender may directly reverse a Venmo payment by reporting it as unauthorized or sent to the wrong person. Payments can be reversed up to 60 days after they are sent.
If the stranger regrets sending you money or claims it was a mistake, you could lose the funds with little recourse.
Protection From Fraudulent or Erroneous Payments
Venmo does have some measures in place to try to protect users from fraudulent payments or scams:
- ID verification: Venmo may ask users to upload a government-issued ID for verification purposes before sending or receiving significant funds.
- Payment blocks: Venmo can block payments from certain users if suspicious activity is detected.
- Holds on funds: Large payments from strangers may have a hold placed on the funds for a period of time before you can withdraw them.
- Recourse for authorized payments: If you authorized the payment but didn’t receive the agreed upon goods or services from a stranger, you can dispute the charge.
Reporting Suspicious or Scam Transactions
If someone you don’t know sends you money on Venmo and you suspect it may be fraudulent, unauthorized, or a scam attempt, you can report the transaction to Venmo:
- Report it within the Venmo app: Open the transaction details and tap “Report”.
- Contact Venmo support: Reach out to Venmo directly via email, phone, chat, or Twitter to investigate suspect transactions.
- Let your bank know: Alert your bank as well if the funds came from a linked bank account.
Reporting suspicious payments as soon as possible can help prevent you from losing money to scams or fraud on Venmo.
Best Practices for Safely Receiving Venmo Payments
If you do choose to accept Venmo payments from people you don’t know, here are some tips to reduce your risk:
- Verify the identity of the payer by cross-checking their name, profile picture, social media accounts, and contact information.
- Only accept payment for goods or services you intend to provide. Avoid payments for unspecified purposes.
- Never refund someone who overpays or sends you money by mistake. You could be an unwitting participant in a money laundering scheme.
- Transfer Venmo payments to your bank account right away to prevent issues if funds are reversed later on.
- Keep documentation of your communications regarding the reason for payment and delivery of goods/services.
Essentially only accept Venmo payments from strangers when you’re confident the person, payment reason, and amount make sense. Otherwise, it may be safer to decline the money.
Is Venmo Designed to Pay Strangers?
Venmo is primarily intended for payments between friends and acquaintances. The app even emphasizes trusting who you pay by stating “Pay people you know” on their website.
However, Venmo realizes many users do pay strangers through their platform, such as for online marketplace purchases or splitting bills. They have instituted safeguards like payment blocks and ID verification to reduce issues with these transactions.
Their user agreement states you should only make payments to people you “know and trust,” but it doesn’t outright prohibit peer-to-peer payments between strangers.
Venmo Fees for Paying Strangers
Venmo does not charge any fees for sending regular peer-to-peer payments from your Venmo balance or linked bank account. You also aren’t charged fees for receiving money into your Venmo account.
However, if you pay a stranger by debit card, there is a 3% fee applied. And any instant transfer of Venmo funds to your bank for a 25 cent fee could potentially be subject to the standard 1% fee if going to an “unregistered” recipient.
So paying strangers with your Venmo balance or linked bank account won’t incur fees, but using a debit card does have a 3% charge. Receiving payments is always free.
Is Venmo Primarily for Friends and Family?
Venmo began as a peer-to-peer payment app for friends to easily exchange money for shared meals, rent, etc. The focus has expanded over time to include broader ecommerce uses.
However, Venmo’s interface emphasizing connections between friends makes it clear the platform was designed for trusted personal connections first and foremost. Transactions between strangers are possible but not necessarily encouraged.
How Risky Is Venmo Compared to Other Payment Apps?
Venmo is considered one of the more risky payment apps for transactions with strangers due to:
- Social feed: The default public transaction feed allows scammers to more easily find targets.
- Two-way transactions: Anyone can pay anyone else without prior connection needed.
- Delayed bank transfers: Funds sit in your Venmo account before moving to bank, allowing time for chargebacks.
- Demographic: Venmo skews younger and transactions are seen as more casual.
PayPal: More Protection for Purchases
PayPal offers more purchase protection for buyers and sellers doing business. You can file claims if issues arise with items not delivered or misrepresented.
PayPal also has more obvious distinctions between friends/family and purchases from sellers/freelancers. This results in PayPal being lower risk than Venmo for transacting with strangers overall.
Zelle: Bank Level Security
Zelle operates within your existing bank account. All users must have accounts at participating banks. Zelle claims payments happen directly between bank accounts with no stored balance.
The need to enroll your bank account means Zelle has more security and regulation. Payments between strangers are less common compared to friend/family transactions.
Cryptocurrency: Additional Anonymity Risks
Cryptocurrency transactions involve additional risks as they are highly anonymous and lack central regulation. Scams, hacking, irreversible payments, and money laundering are major issues.
Overall, cryptocurrency transactions involve even higher risks than traditional payment apps when dealing with strangers.
| Payment App | Level of Risk (1-5) |
|---|---|
| Venmo | 3 |
| PayPal | 2 |
| Zelle | 2 |
| Cryptocurrency | 5 |
This table summarizes the relative risk levels, with 1 being the least risky for transactions with strangers, and 5 being the most risky.
Scams and Fraud on Venmo
Here are some common scams and fraud to watch out for if transacting with strangers on Venmo:
Overpayment Scams
A buyer pays more than agreed upon, asks you to refund the difference, then does a chargeback on the entire transaction. This leaves you out the goods with no payment.
Fake Payment Confirmations
Seller receives email that looks like it’s from Venmo confirming payment, ships item, but finds out no payment was actually made.
Sugar Daddy/Mommy Scams
“Sugar daddy” says he’ll pay you weekly allowance via Venmo in exchange for communication, but then reverses payments after receiving revealing photos.
Fake Invoices
Scammer sends you an invoice via Venmo for a service you never requested, hoping you’ll automatically pay it.
Unauthorized Payments
Money is taken out of your account via Venmo without your consent, often due to weak or stolen login credentials.
There are many other Venmo scams reported daily as well. Use caution when receiving money from people you don’t know, as fraud is a major risk.
Reporting Fraudulent Activity on Venmo
If you encounter scams, fraud, or other unauthorized transactions on Venmo, here are the steps you should take:
- Report it within the Venmo app: Tap the transaction, then “Report” to flag unauthorized activity.
- Call Venmo: Speak to a customer service agent to investigate any fraudulent funds received or sent.
- Contact your bank: Alert your bank of any suspected fraudulent transactions linked to your bank account.
- File a complaint with the FTC: Report the scam attempt and details to the Federal Trade Commission.
- Change your Venmo password: Update your password and security settings to prevent further unauthorized access.
- Monitor your credit: Keep an eye out for any signs of potential identity theft resulting from a scam.
Following these steps can help prevent additional loss or damage from a scam if you’ve shared personal information or lost funds. Venmo also provides recourse in some cases for authorized payments gone wrong.
Is Venmo Safe for Business or Commerce Use?
Venmo offers specific features geared towards business accounts and commercial transactions:
- Venmo Business Profiles: Gain access to shared team accounts and customer management tools.
- Payment flows: Customize payment screens and receipts for your brand.
- Seller protection: Coverage for authorized commercial payments between registered business accounts.
- POS integration: Accept in-person Venmo payments using approved third-party apps and hardware.
Advantages
Key advantages of using Venmo for business transactions include:
- Seamless payments: Customers can easily search for and pay businesses via Venmo.
- Added security: Business profiles provide more legitimacy than personal accounts.
- Branding: Customized payment screens allow branding and messaging.
- Seller protection: Covers claims on eligible purchases between business accounts.
Disadvantages
Some of the concerns around using Venmo for commerce include:
- Higher fraud risk: Less protection compared to credit card payments or PayPal transactions.
- Delays in bank transfers: Funds may be held or reversed after transferring from Venmo balance.
- Manual review: Venmo may flag and review business transactions, delaying payments.
- Tax reporting requirements: Sales through Venmo may be subject to tax forms if exceeding $600 and 200 transactions.
Overall, using Venmo for business can provide convenience but lacks some of the stronger protections and guarantees of other payment processors. Carefully weigh the risks based on your specific business model.
Alternatives to Venmo for Paying Strangers
If you are uneasy about using Venmo to transact with strangers, here are a few potential alternatives:
PayPal
Offers extensive fraud protection and purchase guarantees when using to buy goods and services.
Zelle
Strictly focused on bank account transactions between people who know each other, reducing fraud risks.
Credit Cards
Provide strong buyer protection against issues with sellers. Allows disputing unauthorized charges.
Facebook/Google Pay
May have lower scam risk as linked to individual’s social media or email account identities.
Wire Transfers
Bank-verified transactions with little chargeback risk but higher fees.
Cash App
Similar to Venmo overall but provides option for business accounts and added encryption.
Depending on the specific situation, one of these other services may be able to provide lower risk for peer-to-peer payments between strangers.
Steps to Use Venmo More Safely
If you plan to continue using Venmo for any transactions with people you don’t know, here are some tips to stay safer:
- Avoid privacy settings that show your entire Venmo activity and contacts publicly.
- Never send money to someone you don’t know who promises you profit.
- Transfer Venmo funds to your bank frequently so the balance stays low.
- Monitor your Venmo feed and overall account closely for any unauthorized charges.
- Only communicate with buyers/sellers within the Venmo app messaging when transacting.
- Immediately report conversations or payments that seem suspicious to Venmo customer support.
Keeping payments within the Venmo platform, not overextending your balance, and reporting sketchy behavior can help enhance security.
Conclusion
Venmo offers a convenient way to exchange money with friends you trust. However, receiving payments from complete strangers does carry higher risks of fraud or scams.
Venmo aims to provide some protections, but ultimately leaves the decision and responsibility on users to determine who they interact with. There is no guarantee against losses from chargebacks, unauthorized payments, or other fraudulent transactions.
In general, it’s best to keep peer-to-peer Venmo use restricted to known friends and family whenever possible. But if you need to get paid by strangers, apply extra precautions around verifying the person, only accepting clearly authorized payments, promptly transferring funds out of Venmo, and reporting any concerns.
Exercising appropriate caution, only engaging in transactions you fully understand, and limiting your Venmo balance can help reduce problems. But across most scenarios, more reputable services like PayPal tend to be safer alternatives when money is changing hands strictly between strangers.