Venmo is a mobile payment service that we have discussed before here on DebtReviews. It is hugely popular right now and is riding the wave of the mobile revolution. This is all helped by the fact that it is backed by PayPal, but it’s also great service, allowing for fast and secure transactions.
As is usually the case with services like this, Venmo has also been targeted by scammers. There are perhaps more scams here than there are on PayPal and Western Union put together, and that’s saying something.
So, if you use this service or plan to, be on the lookout for these Venmo scams. If they have scared you into something else, check with our guide on Best Ways to Send and Receive Money Online.
How Most Venmo Scams Work
Venmo scammers exploit a feature in the system that lets users reverse payments even after the money has entered the seller's account. This is something that has been commonplace on PayPal for years, but with Venmo it seems to be even more prominent.
There are two reasons why this is a major issue for sellers. The first is simply the result of an unscrupulous buyer who makes a claim that they didn’t receive an item even though they did. The second occurs when they use stolen credit cards to make a purchase. In such cases they won’t care about reversing any payments, but when those cards are reported stolen then the actual owner’s bank will care and they will reverse it.
This scam works because people assume that because they have the money in their account it is theirs and will remain theirs. This is not true. Even if that money was moved to another account or spent, a chargeback can still be initiated, at which point the seller would be responsible for replacing that money.
As you can imagine, not only can this leave some sellers out of pocket, but because Venmo is often used by average people and not businesses (people who need to sell to make money to pay the bills) it can result in debts, defaults, and more.
At the end of the day the seller loses both the item and the money.
Can you Stop Venmo Scams?
Unlike PayPal, which has a mediation system in place to try and offset such scams and genuine chargebacks, Venmo washes its hands of such issues and leaves them between the buyer, seller and their respective bank accounts. There is no buyer or seller protection at all, and therein lies the issue.
Venmo likely won’t help you if you are the victim of such a scam, so don’t expect any pity or assistance either. The same goes for your bank. It’s just one of those things.
How to Spot Venmo Scams
While it is not possible to safeguard 100% against these scams, there are steps that you can take to limit the chances they will happen to you.
Firstly, it’s worth noting that Venmo should not be used for business purposes. In fact, there have been many instances of payments being cancelled/reversed by Venmo purely because they suspect that it is a business transaction. And in all honesty, if you did run a business this should be the last method you use considering how prevalent Venmo scams are.
Secondly, make sure that you only deal with people you know or trust. This is really why the system was developed in the first place and it’s the only argument that Venmo have against the scams. They created it so you could send money to friends, and what are the odds that a friend would try to rip you off?
Other Venmo Scams
There are more Venmo scams out there, but most of them revolve around this chargeback system. One of the most common involves asking the seller to send some money, and there are many ways in which they do this that may seem legitimate on the surface,
The buyer may send more money than was needed and then say that the extra money was to pay for shipping. They may even say that they made a mistake, before asking the seller to send the money back to another account of theirs. To the seller, it all seems legitimate. After all, they received the money and they have more than they asked for, so why not do as the buyer asked?
In actual fact, this is a scam concocted by a fraudster looking to turn a stolen credit card number into a expensive product and some cold hard cash. They pay them the money and the “bonus” using a stolen credit card number and in return they get the item and the amount that the seller returned. In a few days or weeks, the credit card is reported stolen, chargebacks are initiated and the seller loses all of that money, including any extra they sent, as well as the item.
The Venmo Scammer
Some of the biggest scams in the history of this app were all traced back to one person, who was arrested on suspicion of grand theft in early 2018.
It was claimed that this scammer took over $125,000 from uses across the Los Angeles area. He apparently did this for years and worked with a number of other scammers. Users reported their crimes to the police, but very little was done about them and the scammers continued to collect on big ticket itms, including smartphones, cameras, televisions and more.
When he was finally caught it transpired that he had been using his real name all along, suggesting that it would have been very easy to catch him if the police had tried.
This tells you all you need to know about the attitude of law enforcement towards online scams like this. It is often believed that police don’t do anything because the criminals are in another country, but in many cases, this one included, the criminal is right under their noses and it seems to be more the result of not understanding the technology.
There is also an element of simply not caring and letting the banks and insurance companies sort it out. It’s a similar story with credit card theft and many other scams and it’s why these scams continue to grow.
If it happens to you, you should sill report it, just know that unless you continue to pester the police about the case or have a lot of information about the scammer to pass on, they may not do anything about it.
You may have more luck trying to shame the company, the police and the scammer on social media. In fact, in the case of the aforementioned scammer he only seems to have been caught because a major viral news site did the legwork and traced countless thefts back to him.