Held liable by whom? They aren’t a supervised bank or financial institution.
Neither is my landscaper!?
Liable by the damaged parties - possibly an entire “class” of Venmo customers.
- Their negligent omission is repeatedly resulting in damages.
- The damages are entirely foreseeable (even reported in the media!).
- The damages are easily preventable (with a minimal feature add!).
thus creating liability.
Even if the individual damages per incident are small, a jury can add substantial punitive damages for knowingly not preventing a recurrence for many years.
Naturally, they’ll try to point to their boilerplate terms of service. But with increasing domination of their market niche, the threshold for enforcing terms where a consumer is coerced into “signing away” liability from gross negligence is very high.
And, since this is a consumer service (not a bank, as you pointed out), consumer protection agencies, and state attorney generals are free to get involved and exert pressure.
I think I mentioned this earlier, but I have tried to limit the possibility of theft by having an account at a local savings bank whose only purpose is to transfer cash. We used to have ATM cards but now the banks only issue debit cards (which give you far fewer protections than credit cards or the ATM cards). So, we keep say $2000 in that account. Venmo and Paypal are connected to that account. So, the risk is the balance in that account.
After a trip to Berlin where we got cash at a cash machine, someone skimmed the number and engaged in a number of small transactions and drained the account. That was insured and the bank eventually reimbursed us for all of the fraudulent transactions.
We have no other account that has a debit card attached to it and all other accounts require a written and verbal confirm on our cell phones from us before withdrawals (inconvenient at times). One of those counts is set up to do ACH payments to other accounts and some autopays. So, I guess there is some risk there.
But we don’t pay the 3% that @TexasTiger2 is paying.
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I like your plan.
Just to be clear, I only use Venmo and pay the 3% when my D needs me to pay someone that only takes Venmo, like her University club’s dues fees or similar. And I won’t link my checking account to avoid the fees for the reasons I stated earlier.
I think that’s really smart.
My daughter has a venmo where she and her friends exchange money when they split costs of things (dinners, etc.) She has it attached to an account that she only uses for Venmo and keeps a very low balance on.
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Does a business have an obligation to prevent damages caused by others? Nothing requires Venmo to run the best program ever, to go above and beyond to stop damages. Car companies could make cars only go 60 miles per hour, but they don’t. Knife companies could make knives more dull and prevent a lot of injuries, but they don’t.
No one says Venmo has to put all safeguards into their product, no matter what the cost or what the lost business. When it becomes regulated, the CFPB or another agency will regulate it, it will cost Venmo more, and Venmo will pass those increased costs onto their customers.
I’m sure you are right and someone will sue Venmo, but that doesn’t mean they will win.
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In general, yes, anyone (whether a natural person, or a business) has some obligation not to cause foreseeable and preventable damages TO others. Between strangers, that might be limited to “acts” - but between related parties, that often includes “omissions”. Even more so between uneven relationships, e.g., one party being a self-professed expert in financial systems, and the other party is a layperson!
Different concepts apply for inherently dangerous products, such as knifes, guns, etc. - where legal ownership and use might be regulated (in some states, not every knife is “legal”). With that, the owner (not the manufacturer) of any unlawful use of a knife will be held accountable.
But even with a knife, the manufacturer would be liable, if the injury is due to a faulty design or manufacturing.
Venmo is not that type of product/service. The consumer does NOT use that service because they implicitly want to speculate with/risk their funds.
So there is a reasonable argument that the absence of a simple safeguard against known fraud (allowing a consumer to refuse/flag an unexpected payment), amounts to a defect in their service.
Thanks been using a credit card for EVERYTHING for years and pay in full every month. Have my D doing this too. This just confirms we are on the right track.
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