It’s Easy to Get Scammed on Venmo(slate.com) |
It’s Easy to Get Scammed on Venmo(slate.com) |
1 - anything other than 'money to friends', and Venom says "that's a business/commercial transaction" and reserves the right to cancel/freeze/reverse or otherwise not support it.
2 - as it happens, sure enough, beyond that, the transaction was reversed when the other sides bank NSF'ed the transfers.
If you use this platform for potentially sketchy transactions, I'd say it's on the user to protect themselves. When I sell anything on Craigslist, it's always cash only. Even then, there are no guarantees.
That's certainly one way of dealing with your customers. Remind me not to touch Venmo again in the future.
If so, then the problem is only a completely artificial one and made of mere policy decisions. Venmo could just act as a blind intermediary, no questions asked, completing any transactions once both parties have verified their intention to transfer money.
That's generally how banks work for at least any reasonable sums of money: I can send or receive thousands of euros to whoever and from whoever without worrying that the transfers might be cancelled by some vague policy. With tens of thousands, I'd have to ask my bank to lift the daily transfer cap beforehand, but still no questions asked. I assume that it goes in a relatively similar way in the USA.
Thus, any mobile money transfer service ought to be at least as trustworthy as that. There needs to be a point where the transaction is either complete or discarded, after which both parties can trust it. The service also shouldn't discriminate, it shouldn't matter if it's a private transfer or a merchant transfer. If they want the money they could sell transaction history imports for bookkeeping at a higher price to merchants or something.
Venmo could still do their instant transfer magic and add value there, but them considering whether a transfer is ok or not is akin to an internet service provider who would want to consider which web pages I can view before letting me download them.
The government can and does impose "some vague policy" on what you can and can't do with your money. If they decide that you have been "structuring" your payments to avoid triggering various reports being generated, that is considered a crime. So making several payments of 9,000 might be illegal even if you've done nothing wrong (you should have done 11,000 so that all the reports could be generated, didn't you know?)
Oh and by the way people can just take money from your account via ACH transfer if they have the correct numbers. You won't get any kind of confirmation, the bank just assumes that nobody would be unwise enough to make an ACH transfer without the consent of the other party. The US generally believes in insecure infrastructure and the 500-pound surveillance and police gorilla to keep everyone in line. It works surprisingly well, to be honest.
Is the ACH an internal network between banks or something that regular people could use, either directly online or by dropping wiring orders to some box in the bank? If the latter, it sounds so crazy I almost don't believe it. Where is ACH used and who actually uses it if it implies that your money could be just taken away by someone who knows your account number (and hopefully some other information that you wouldn't normally share anywhere) ?
Hahaha no. Banks here charge $30 to send money instantly via "wire". ACH is cheaper but takes days to clear.
1) sending money to anyone or receiving money from anyone happens mechanically (nobody will step in and say sending $200 to your friend will be cancelled because it looks like a merchant transfer); and
2) when banks do clear the transfer it is cleared for real, and if you see the money on your account it's yours for real by that time.
This would be in opposition to what Venmo does, i.e. lies to you that you've received the money and you haven't. Or can it happen in US accounts that you see a fresh deposit on your account but the next day it won't be there anymore?
Anyway, the issue Venmo has here is similar to what banks also have to deal with: in theory you can reverse a transaction before it's cleared when sending money between accounts. That said, it's quite a bit more difficult I'd assume, and perhaps a lot of people who would otherwise be happy with scamming those out of money on third-party systems would think twice about doing so when a bank is involved. Interesting stuff, and it seems most startups who try and break into these sorts of markets have to learn all the hard lessons the big companies did years ago, which sucks for consumers. On the other hand, the incumbents are usually so slow moving and painful, I applaud those who attempt it.
APCA (Australian Payments Clearing Association) has been working on making real-time payments accessible for a while [1].
[1] http://www.apca.com.au/about-payments/future-of-payments/rea...
Nobody needs to use something like Venmo here.
In America you need a ~20 digit account and routing number and even then Im not sure how to do it through my bank.
Ah, that explains it. PayPal is a company that has no problems with stealing money from its own customers, so it's no surprise that they're perfectly happy being complicit in fraud.
I've never touched Venmo and now after this, never will touch Venmo and will make sure everyone who suggests it, read this prior to using it.
Would be silly of Venmo to do otherwise, as that would be an easy way for them to go out of business.
Also they don't really seem to work on fraud cases, at least not as far as I can discover; a friend who ran a website selling digital goods (but unique goods so he actually had to buy each himself so fraud was costing him money, not only making him less revenue like it could be if it was software or an ebook) was scammed by the same user a number of times and sure, Paypal cannot give my friend his money but it was very clear this user was a scammer, especially after doing it to one company a number of times and probably to more companies as well...
This seems the same case; if they see this scam happening, why do they still refund? They know it's a scam; that weird remark from Eran Kimchi even says so. So why not screw the scammer instead? The seller always ends up screwed with Paypal. No difference here.
Transactions in the US banking system aren't instant, so they fake the transactions and pretend like you actually received them. Then when the actual transaction fails, oops you're out of luck.
Also they should make it more clear about which types of payments are acceptable (though this is more of a complaint about TOS in general).
* Paypal purportedly credits sellers if the seller proves they shipped / sold something [1]
* Square does not necessarily credit sellers and may pull funds from a bank account [1]. (May have changed since the article?)
* Visa protects merchants from fraud-related chargebacks if the online sale is "verified by Visa"[2]; if not, the merchant may have to suffer the loss. In particular, if the card was physically present, the merchant seems to lose if they screw up any of the little details in the charging process.
* Amazon protects merchants if the transaction occurred according to their policy and the merchant can prove they shipped goods or delivered a service [3]. I imagine if you embed Amazon Payments into your site as it's intended and sell legal stuff, you're fully covered against fraudulent buyers.
So it looks like Venmo (and likely Snapcash) are unique in offering such little fraud protection. Probably due to how their User Agreement works (i.e. they're not meant for merchant selling at all). Also why they can offer no-charge transfer services.
What's probably happened here is that these new services lack regulation and thus have no requirement or incentive to inform users about the consequences of chargebacks. I hate to say we need more regulation, but for Eran Kimchi (Venmo head of fraud) to say "You made an innocent mistake, and you paid for it" is not an acceptable outcome; Venmo is definitely guilty of negligence here.
[1] http://alexshvartsman.com/2014/02/11/screwed-by-square/
[2] page 82 http://usa.visa.com/download/merchants/chargeback-management...
They do however need to work on customer support and transparency, but that's if what's being reported is even completely accurate. My entire network of family, friends, and colleagues all use Venmo and none of us have had any issues.
Once you understand that, you can see why Venmo doesn’t want users to make merchant transactions, by which it really means payments outside their networks of close acquaintances. (“Merchant transactions,” Vaughan tells me, “is sort of the catchall for the things that we can’t predefine.”) The analogous real world example is that you wouldn't leave a pair of tickets in a mailbox just because someone sent you a note promising to drop off an envelope of cash at a later date.
Isn't that why you're using a PAYMENTS platform, and not a PROMISE NOTE platform? When you receive or send a payment on a PAYMENTS platform, that's not, and shouldn't be, equivalent to a note promising cash. It should be the cash.
Since it's not, is it not fraudulent to say that it is and pass it off as that?
I can see how they should make it more clear, but the people who got scammed were also not very well informed.
I guess there is a lot of manual work involved in handling all those transactions and fraud attempts.
Additionally, PayPal owns a massive amount of legacy code and APIs. There are plenty of con talks where PayPal describes how they were mired down in bureaucracy when updating a single line of code in Java (JSP) but managed to flip that overhead on its head by running a NodeJS stack on top of the JSP stack (and in some places replacing it).
I see the value of paypal, which is to create a screen between me and a dodgy website which I am buying from. That website can't get my credit card number and therefore take further payments. But when I am making a payment to someone why should I need an app to protect me against fraud? So I don't get the security aspect either.
Suggestions for a better title are welcome, as always, but don't forget that HN's rule is to use the original title unless it is misleading or linkbait.(https://news.ycombinator.com/newsguidelines.html)
Sure, you can't just transfer money to someone's facebook account, but I guess that the inconvenience of having to ask people for their bank account number before you can send them money isn't really that big of a deal.
Especially considering that we are used to paying everything by bank transfer. Things like rent, utilities, parking tickets... any time you get a bill, there's a bank account number on it that you need to transfer the money to. And you just pay it online using the bank's website.
(For paying recurring bills, you can also grant a company permission for "direct debit" for your account, so you don't need to do anything. It sounds risky, but I've never had any fraudulent charges on my account)
I have Bank of America. For the same transaction to happen I would need my friend to sign into his bank account on a mobile phone, initiate a wire transfer from his checking account to my checking account, which requires me to provide him my checking account number and zipcode and full name.
And that's just a 1 on 1 transaction.
The most common use case is if I'm eating in a group of say... 6 people. Instead of splitting the bill 6 ways which many restaurants won't allow one person will front the bill. The rest of the group just "Venmo's" the person who fronted the bill whatever they owe. No exchange of account numbers, no asking for Paypal email address, none of that. The assumption is that everyone has Venmo and everyone's connected on Facebook. As long as those 2 facts are true (which is common for American millennials) the convenience is bar none.
Most people wouldn't remember a number like a checking account number nor do they carry checks around with them. Venmo is simple and easy for them to send money to friends without having to log into a bank's shoddily designed website and figuring out how to transfer funds which is probably non-obvious in the first place.
