Payments company PayPal has reached a settlement with the Federal Trade Commission (FTC) on claims that its social payments platform Venmo failed to disclose information to costumers on security and privacy issues.

According to the FTC, Venmo not only misled users on the speed of the transfer of funds, but also on the availability of those funds once a transfer was initiated. The FTC said that Venmo failed to tell users that the funds in question could be frozen or removed based on Venmo’s review of that transaction.

When it comes to privacy, the FTC had many issues including Venmo’s auto-friending feature, where it pulls contacts from the user’s phone as well as a setting default that makes their transactions public. Not just that, but the FTC said that the p2p service “misrepresented the extent to which consumers’ financial accounts were protected by ‘bank grade security systems,’ and violated the Gramm-Leach-Bliley Act’s Safeguards and Privacy Rules, the complaint alleges.”

In a statement released yesterday, Acting FTC Chairman Maureen K. Ohlhausen said:

Consumers suffered real harm when Venmo did not live up to the promises it made to users about the availability of their money. The payment service also misled consumers about how to keep their transaction information private. This case sends a strong message that financial institutions like Venmo need to focus on privacy and security from day one.

Read more The Verge and FTC.gov

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