Is Venmo Safe? Protecting Yourself Against Hacks and Scams - The Compass Blog | Digital Identity and People Search

Running to the nearest Western Union office to transfer money or sending a check by snail mail is so last century. These days there are plenty of ways to send money easily, notably with mobile-centric services like Venmo. Venmo makes transferring money easy, but unfortunately it also creates opportunities for fraudsters and scam artists.

How Venmo Works

At its heart, Venmo is more or less a mash-up between a Paypal-style payment app — it’s owned by Paypal — and a social network. Its primary purpose is to make it easy for you to exchange money with friends and family, whether that means splitting a lunch tab or helping someone out with an unexpected bill.

You don’t have to link a bank account, debit card, or credit card to receive a Venmo payment; just download the app and open an account. Once you have funds in your Venmo account you can send them to anyone else with a Venmo account. You can also use the funds to make purchases in any app, online or real-world retailer that accepts Venmo. If you want to use the funds outside of Venmo, you’ll need to link to one of your real-world accounts so you can transfer your money.

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The social part comes from Venmo’s news feed, which by default shows your activity on the app. Whenever you send or receive a transfer or make a purchase, it’ll be visible. You can opt to leave this completely public, restrict it to friends, or turn it off altogether. If your account is set to full privacy and the person you’re sending to is completely public, Venmo will respect your privacy and override your friend’s public settings so your activity will not show up on the app’s main feed.

Is Venmo Safe?

As you’d expect in a Paypal-owned company, Venmo has plenty of security tools in its arsenal. It uses encryption to protect your account details, for example, and keeps your information on secure servers. You can also set up a two-layer (or more) authentication process for transactions and protect your Venmo app with a PIN.

That being said, anywhere lots of money changes hands you’ll find criminals and scam artists looking for a way in. Security researchers occasionally identify vulnerabilities in the software, but those are typically caught and snuffed out before they’re actively used.

Most of the time, it’s not clever hacking that puts your money at risk. It’s you.

Venmo Scams: A Quick Primer

Venmo isn’t intended to be your general-purpose payment platform, the way parent company Paypal is. It assumes that you know and trust the other users you exchange funds with, as opposed to using it randomly out there in the great wide world for purchases. If you do use Venmo to buy something, it should only be from — again — someone you know or a merchant from Venmo’s approved network.

Venmo’s not meant for purchases, so unsurprisingly scams often take that form. You may accept a deposit to hold a Craigslist item, for example, which goes through just fine. So you accept the balance of the payment and then ship the item, only to have Venmo claw back the larger payment because it was made from a hacked account or stolen card. At that point your money’s gone, and so is the item you were selling.
Another common approach is to create contacts that look like or spoof your real-life friends and family and ask for money for a plausible reason. It’s easy to do, especially if you or your friends leave your Venmo feeds on their public setting.
If you don’t protect your phone with a PIN or biometric sign-in, that’s another potential area of vulnerability. Anyone who picks up the phone can send a hefty transfer to an account they control. They might also potentially be able to change your password or linked email, essentially gaining control of your Venmo account.

Sometimes the problem really does start with a hack. If you use the same password and email address across multiple sites and platforms, a breach at any of those might give someone the credentials they need to access your Venmo account. At that point, only Venmo’s daily transfer limits stand between you and an empty bank account.

There’s Not Much Recourse for Losses

In most cases you can’t cancel or reverse a Venmo payment, so once you’ve sent the money, it’s gone. That’s not a big deal if you’ve mistakenly sent it to the wrong friend — you can ask them to send it back or just forward it to the right person — but with a scammer, you’re out of luck.

Venmo isn’t intended for purchases outside of its network of merchants, so there aren’t a lot of avenues you can pursue to get a refund. If you challenge a fraudulent mystery charge on your account within 60 days, there’s some likelihood of getting it back. If you’ve voluntarily sent the money, you’re probably out of luck even if you’ve been victimized by a scammer.

Protecting Yourself on Venmo

As always, there are a few best practices you can follow to make yourself safer:

Keep a low balance in your Venmo account, which automatically limits your losses.
Turn off overdraft protection for the bank account you link to your Venmo account, so any attempted purchases or transfers will simply bounce if you don’t have enough on hand to cover them. As a bonus, that’s also a good way to keep yourself from overspending.
Set a PIN or biometric login for your phone, so it’s safer from in-person misuse.
Install antivirus and anti-malware checkers on your mobile devices, and run them regularly.
Use Venmo’s multi-factor authorization option.
Check your Venmo account regularly for transactions you don’t remember, and your linked bank or credit card accounts for any unauthorized Venmo withdrawals.
Reach out to friends and family directly to confirm any requests for money.
Set up Venmo to send you alerts for your transactions.
Use a different payment method altogether for your online purchases.

You may also want to think seriously about whether to link a bank account or credit card at all. The potential downside is that any linked account is vulnerable if your Venmo account is compromised. The upside is that in the event of a hack or fraudulent transfer, your financial institution may offer better protection than Venmo does.

It’s worth making time to sit down with a rep at your bank to specifically discuss how it would handle exactly this situation, and whether different products would offer better protection. When all is said and done, you’ll have to weigh whether the increased security balances the increased risk. You might even opt to set up a separate account specifically for Venmo, which gives you all of Venmo’s freedom of use but protects your main personal accounts.

Take the Initiative

The “ounce of prevention” approach is always your best bet, but you have other options as well. One is to use people-search tools like those at Spokeo to try and track down the real person behind the username, email address or phone number that was used to contact you.

If you’re successful, don’t confront them yourself. Pass the information along to law enforcement, who can potentially bring criminal charges. It may not get you your money back, but it’ll take at least one scammer out of circulation for a while, and that will feel pretty sweet.