Drug deals and breakups: Venmo rankles privacy advocates
PayPal app lets users send money, message, leading to questions about what’s shared
More than a thousand viewers of ABC’s “The Bachelor” took to their mobile phones in early March to offer their condolences to Becca Kufrin after she had had a marriage proposal revoked on national television.
These well-wishers didn’t reach out to Ms. Kufrin on Facebook or Twitter. Instead, they fired up Venmo, an app owned by PayPal Holdings Inc. that lets its users send money to one another for free along with a message. Within a few days, Ms. Kufrin’s Venmo account was full of words of encouragement, visible on a public newsfeed, and more than $6,000 in donations.
If that episode illustrates the appeal of Venmo’s social network, the uproar surrounding a web project unveiled last month shows why it rankles critics. Privacy advocate Hang Do Thi Duc sifted through more than18 million Venmo users’ public transactions and picked out five about whom she was able to ascertain a lot of intimate information. Among them: an alleged drug dealer who accepts Venmo and a couple that got into a fight on Valentine’s Day.
PayPal is grappling with these opposing forces as it tries to turn Venmo into a more mainstream payments service. Venmo users link their bank accounts or credit cards to the app, allowing them to send payments with a few taps on their phones. Users often send messages with their payments, which are visible on a public newsfeed by default unless the settings are changed.
The company recently introduced a Venmo debit card that allows users to share both online and offline purchases on its social network. After Ms. Do Thi Duc’s “Public By Default” website went live, Venmo users were shown a tutorial when they opened the app—about privacy settings and how to opt out of automatically sharing their transactions publicly.
“We’re obviously pleased with the initial reception within the Venmo user base with all the different services we put out,” PayPal Chief Executive Dan Schulman said in an interview. At the same time, “we want to be sure people understand just what they’re sharing and what their various options are,” he added.
Anything that affects Venmo’s growth and PayPal’s ability to turn it into a moneymaker is of interest to Wall Street. Activist investor Third Point LLC recently took an $800 million stake in PayPal and cited Venmo’s potential as a big reason why, according to a letter to investors.
Venmo’s payment volume expanded 78% to $14.2 billion in the second quarter, and around 17% of its users have completed a transaction that generates revenue for PayPal. Third Point expects Venmo to add $1 billion in annual revenue for PayPal within the next three years, according to the investor letter.
When it was founded in 2009, Venmo hyped its social elements as a way to make the app more immersive.
“The shift to mobile payments requires a service that captures the subtle gestures involved in everyday cash exchanges,” executives wrote in an early summary. “Venmo transactions are personal, with [digital] notes that make payments feel like conversations.”
While the ability to send money easily gets consumers to download Venmo, it is the social-media feed that keeps many people opening the app multiple times a week.
Carlee Barackman, a 28-yearold who works at a startup in Detroit, originally downloaded Venmo to split a bill with a friend a few years ago. Now, she checks the Venmo profiles of blind dates and scrolls through the Venmo newsfeed on Sunday mornings to try to guess what friends did the night before, based on their captions.
“It’s a little more indicative of who they really are than the nice photo they post on Instagram or the really intellectual tweets they put out,” Ms. Ba- rackman said. She added that she doesn’t plan to make her transactions private because “it’s a whole extra click or two and I really don’t care.” Around 88% of Venmo users who responded to a small survey carried out by researchers affiliated with the University of Washington “indicated indifference towards whether their transactions were shared or private.” Another small survey they carried out, of people who haven’t used Venmo, found the opposite: 88% expressed a negative impression of including a social-networking element inside a payments app.
The social aspect of Venmo “weirds me out,” said one survey respondent who had used the service. “I can’t wrap my head around why people would want their payment activity to other people, even friends, to be publicly visible.”
The survey results were published by the Association for Computing Machinery in a 2017 journal article. Consumer watchdogs have faulted Venmo for its privacy policies. In February, the Federal Trade Commission accused Venmo of misleading consumers about the security of the app and making it too difficult to change privacy settings. Under the terms of a settlement, PayPal agreed to change its disclosures to more clearly tell users how to limit sharing of transaction details. It didn’t have to pay a fine.
PayPal’s Mr. Schulman said that the company is responsive to customer feedback and that “if we had our customers come back and ask for one feature or another, we would always build that.”
Mr. Schulman, who is 60 years old, said he thinks the younger users who dominate Venmo have a good grasp of what they’re sharing. “If you think about the millennial generation, they really do understand this technology,” he said. “It’s not like my mom trying to figure out what to set these different defaults and share options.”
The company recently introduced a debit card that allows users to share both online and offline purchases on its social network