3 min read

How to Avoid Venmo Scams

How to Avoid Venmo Scams

Venmo has become an increasingly popular cash app both among friends and even among businesses, processing a total of $230 billion worth of payments in 2021, a 44% increase over 2020. The app’s easy functionality, speed of payments and fun social element make it a popular tool among people of all ages.

However, like with any payment service, you should be aware of its limitations and the risks that come with using the app – especially for transactions with individuals you do not know. Here’s a quick review of a common scam fraudsters pull on Venmo and how you can protect yourself from it.

How do Venmo scams work?

While payments seem to be instantaneous – as the funds appear in your account in real-time – payments actually take several days to clear. Fraudsters take advantage of common users’ lack of understanding of how the payment process works, often in the context of buying an item you have put up for sale on an online marketplace. Here’s how:

Step one: You list an item for sale on an online marketplace.

Step two: A fraudster contacts you agreeing to buy the item, asks to use Venmo as the payment method and you accept.

Step three: The fraudster transfers the payment using a fraudulent form of payment, but the amount still appears in your account instantly. You hand off the item.

Step four: A couple days later, fraud is detected by a credit card company associated to the Venmo account, and the payment is reversed, leaving you in the negative.

Your balance changed after the fraudster made the payment and the new funds were available to use only under the assumption that there was no fraud involved. Once fraud is detected, either by Venmo or a credit card company associated to either account, the payment is cancelled and reversed, leaving you without the funds or the item you sold.

How do you protect yourself from a Venmo scam?

Venmo clearly states in its security policy that it is “designed for payments between friends and people who trust each other.” Venmo does not generally assist in instances of fraud like the one described above, as it does not offer buyer or seller protection. So while Venmo may assist in reversing a fraudulent payment, you are not likely to get your funds back.

Given the time it takes to validate payments through Venmo and the lack of fraud support they offer, it’s best to use Venmo only with people whom you know and have regular contact.

As an alternative to using Venmo, use cash when dealing with strangers. And remember to meet in a public place during daytime for the exchange where there will be others passing by.

Christi McWilliams, CCBSO, CAFP, ABCP, CBSM

Christi McWilliams, CCBSO, CAFP, ABCP, CBSM

AVP, Security Officer - Financial Intelligence (515) 245-2876 Email Christi

Christi McWilliams is the Bank Security Officer at Bankers Trust and has more than 15 years of experience in the banking industry. She began her career at Bankers Trust in the Customer Service department, followed by several years as a Relationship Banker, Electronic Banking Specialist and Deposit Operations before joining the Financial Intelligence team in 2015. Her responsibilities include all aspects of physical security enterprise-wide, robbery prevention, and fraud monitoring. Christi is a Certified Community Bank Security Officer (CCBSO), Certified AML and Fraud Professional (CAFP), Certified Bank Security Manager (CBSM), and a Certified Associate Business Continuity Professional (ABCP). In her free time, Christi serves on the Crime Stoppers of Central Iowa Board and is the current secretary.

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