Why your CU is not on the hook for a Venmo mistake

I can see why people are intrigued by Venmo, the platform which facilitates person-to-person cash transfers. With a mobile phone it makes everything from paying up after a poker game to splitting the dinner check with the friend afflicted with alligator arms when reaching for his wallet as easy as sending an email. But I am inflicted with a compliance person’s paranoia about a payment system that has implications for both your members and your credit union.

My interest has been stoked by this recent article in the Wall Street Journal. The article correctly points out that users of Venmo and similar peer-to-peer platforms are discovering that they are out of luck when it comes to reclaiming funds they sent in error. Our compliance department also received a call asking if credit unions face additional liability when a member links their account to the Venmo platform. The short answer is “No:” with the usual caveat that this is one man’s opinion and not legal advice, here’s why I’m right.

The Venmo platform is remarkably simple. Venmo is a pay pal service. When you sign up for Venmo you provide a debit credit, credit card, or prepaid card which Venmo uses to facilitate account transfers. You can also sign up for a Venmo debit or credit card with either Visa or MasterCard… Once you have established an account you can simply send an email to another Venmo user who is on the platform’s directory and the platform executes the transaction. It’s a very crude example of how we are moving toward a cashless society.


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