Venmo has been suffering payment frauds in the past. As per the Wall Street Journal, the company has reported heavy losses of about $40 million in just the first quarter of this year. The figure is much higher than what the company had guessed. The internal documents revealed that much of the losses were because of the payment frauds.
Not much has been revealed about the fraudulent activities so far. The documents weren’t clear enough to tell the cause of the fraudulent activities that whether they took place through hacked accounts, stolen credit cards, or other creative scams.
“It needed to make some changes, and now it’s clear those changes were likely due to fraud,” Venmo revealed. Venmo has lost millions in order to compensatethe user for their losses; it is the company’s policy to reimburse the amount users have lost due to the fraud. In order to deal with the problem, the company blacklisted all those users whose accounts seemed to be suspicious. Moreover, it also canceled its instant transfer feature that facilitates users with the quick transfer of the funds to their bank accounts.Venmo also discontinued the online service that lets customers send and receive money through its website. Even though web-based payments were only responsible for 2% of all transactions, they led to 15% of net losses.