InvestigatorsMatter for Mallory


Venmo accounts frozen; users say payment platform won’t say what they did wrong

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Posted at 6:00 AM, Nov 09, 2021
and last updated 2021-11-09 06:14:15-05

BALTIMORE — Users of a popular payment app say they were booted off the platform and they have no idea why.

Susannah Sudek sent her daughter $200, then Venmo froze her account. A few days later, it was permanently deactivated.

“They didn’t give me any explanation they just said your account is deleted,” Sudek told WMAR-2 News Mallory Sofastaii in May. “I couldn’t understand, I didn’t do anything wrong.”

READ MORE: Woman kicked off Venmo warns other users about keeping a balance

After WMAR-2 News contacted Venmo, Sudek was informed that her account was incorrectly deactivated. Venmo uses an automated process to periodically screen accounts to help protect users and their financial security. Security flags were raised causing her account to be frozen.

Since May, Sofastaii has received emails from Venmo users around the country whose accounts were frozen. Customers have said they don’t know why their accounts were flagged, and the company won’t tell them how they violated their policies.

“Hi Alec, your Venmo account has been frozen due to some recent activity that triggered security alerts,” Alec Adamson received via email from a Venmo customer service representative.

Venmo followed up with a second email stating: “We have recently reviewed your usage of Venmo's services, as reflected in our records. Due to the nature of your activities, we have chosen to discontinue service to you in accordance with Venmo's User Agreement. As a result, we have placed a permanent limitation on your account.”

Adamson said he only used his account to send money between family and friends.

“I didn’t get any response from them, tried to chat them a couple of times, called them, and basically they were very vague, saying they can’t tell me the reason. It’s just a complete surprise to me,” Adamson said.

Venmo permitted Adamson to transfer his remaining account balance, but was told he’d no longer be able to access his account.

Complaints to consumer watchdog agency
The Consumer Financial Protection Bureau (CFBP) has received hundreds of complaints about Venmo.

Of the 332 filed since 2019, 103 complaints involved a user’s account being frozen, and consequently, many customers were not able to access funds in their account. Venmo can hold money in a user’s account for up to 180 days to protect against the risk of liability or if the user has violated the Acceptable Use Policy.

Venmo currently has 76 million active users.

Venmo's response
A Venmo spokesperson answered Sofastaii's questions via email but did not respond to her request for an interview. The company spokesperson wrote:

"Venmo is committed to the highest levels of compliance, and we are required to ensure that account holders adhere to our policies, which all customers must agree to before using Venmo’s services. If accounts are found to be improperly using our services, we will take appropriate action. We take this process very seriously and our decisions are designed to protect our customers and platform. We work diligently to provide a positive experience for customers and understand the impact that any holds may have, and our dedicated Customer Support team is available through phone, email, webform, or chat to help look into any matter.”

WMAR-2 News has also learned that Venmo doesn’t share how it decides to restrict a user’s account, not even with the user, in order to protect the systems that monitor activity on Venmo.

Reasons for Frozen Accounts
“I do think Venmo’s handling this poorly because they’re not revealing enough information,” said Bill Sieglein, a cybersecurity expert and former U.S. intelligence official. “It happened to my brother as a matter of fact, just last week.”

After Sieglein’s brother’s account was frozen, he received an email from Venmo asking for documents to verify his identity.

Venmo has lower transaction limits on accounts where the user’s identity hasn’t yet been confirmed.

“They should’ve just come out and said we are being asked to comply with certain laws and by doing such, we need you to provide this information. They make it sound like it’s the user’s fault or the user has done something wrong,” Sieglein said.

Users can check if Venmo has verified their identities under Settings > Identity Verification.

It could also be that a user violated Venmo’s policies, sometimes unknowingly. Venmo is supposed to be between friends. Users are required to have a business account to send or receive payment for goods and services.

However, Adamson said he read the rules and he doesn’t think he broke them.

“I told them I’m really happy to send my driver’s license and passport, whatever they need to make sure it’s me. I know that stuff happens, mistaken identity and stuff, but I never got the chance,” Adamson said.

Unfreezing your account
Venmo users with frozen accounts will need to contact Venmo via phone, email, webform, or mobile app chat.

And there's no formal appeals process. Users can request another review, but if Venmo finds that a user violated their policies, their accounts may be permanently deactivated.

Also, if you receive an email from Venmo, PayPal or any other financial institution asking to confirm your identity, don’t click on the link. Go directly to the bank or app to avoid any phishing scams.

For a full list of Venmo’s restricted activities, click here.

To file a complaint with the Consumer Financial Protection Bureau, click here.

Or click here to file a complaint with the Federal Trade Commission.