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Venmo Scams-How They Work & How To Avoid Being A Victim

Introduction

Peer-to-peer (P2P) payment systems, also known as digital payment apps, have become ubiquitous since the COVID pandemic. COVID forced a lot of people to rethink virtually every human interaction.

During the pandemic, the ease of use of systems such as Venmo has made it virtually certain that P2P players are here to stay. In fact, a recent industry forecast states that the dollar amount of P2P payment transactions are estimated to increase from $1,447 (in 2021) to $4,064 in 2025 per person per year. 

And in the United States, Venmo, a PayPal subsidiary, is expected to facilitate a significant amount of these transactions. In fact, Venmo’s quarterly transaction volume increased from $6.8 billion in Q1 of 2017 to $58 billion in Q2 of 2018. And those are pre-pandemic numbers! 

In light of Venmo’s recent partnership with Amazon, Venmo transfers are likely to increase at an accelerated rate.

This means there’s a golden opportunity for Venmo consumers. Unfortunately, that also means new ways for scam artists who can manipulate Venmo transactions to outmaneuver unsuspecting users and separate them from their money. 

This article aims to:

  • Explain what Venmo is
  • Discuss how Venmo scams work
  • Identify examples of common Venmo scams
  • Show you how to avoid becoming a victim

What is Venmo?

Venmo is a person to person (P2P) payment system available on iOS and Android phones. The convenience of mobile devices allows Venmo users to quickly and easily exchange money. 

You may have heard the term mobile payment app, or digital wallet app. That’s Venmo.

According to Investopedia, Venmo began in 2009 as a text-based platform.  Over time, Venmo evolved from a text-based platform to the integrated social network and money transfer app you now see. 

In 2013, Venmo was acquired by PayPal, which still owns Venmo today.

How Does Venmo Work?

People use Venmo to exchange money via an app that they install on their iPhone or Android phone.  After installing the Venmo app, you can link your account to a checking, savings, or credit card account. 

From there, individuals can perform money transfers between each other for no charge. However, Venmo charges 3% for transactions financed with a credit card. 

People can also use Venmo at retailers. According Venmo’s website, there were over 2 million participating retailers at the time this article was written. 

In fact, Venmo generates most of its revenue from transaction fees that retailers pay in order to use its services.  By charging retailers to use its platform, Venmo is able to provide a user-friendly money-exchange environment for consumers.

Unfortunately, this ease of use also allows scammers to take advantage of unsuspecting victims on Venmo.  We’ll take a look at several examples, but first let’s walk through the basics of how a typical Venmo scam works.

How Does a Venmo Scam Work?

Venmo scams may vary. And new ones appear every day. However, they have very similar traits.

Initiating contact

Most of the time, the victim is contacted by the con artist. This can be for any number of reasons. 

For example, a scammer can send a message to the victim saying that they might be eligible for a cash reward. The message contains a disguised link to log into their Venmo account for the transfer. 

A similar scam might be someone posing as a Venmo employee. That person might request that you help with the two-factor authentication so they can help access your account. This might be under the guise of ‘reviewing suspicious transactions.’ 

Friend requests and other ‘quick money offers’ follow similar paths. 

However, there are also instances where the victim initiates contact. Usually, this happens in cases where the scammer has set it up in advance. 

A common scam is posing as tech support. A Venmo user initiates contact by using contact information that the scammer previously provided.

This could happen either online (with a website URL) or by phone (using a phone number that connects the victim to the scammer or one of the scammer’s agents).

The ask

However contact is initiated, there’s some sort of request. It might be a straightforward Venmo request, or it could be a request for information.

As in most scams, a Venmo scammer probably doesn’t have everything they need to separate the victim from his or her money. 

Otherwise, they would just take the money from the Venmo account, hope they don’t get caught, and move on to the next victim. 

The scammer usually needs something and has to ask for it. If the victim’s response is simply to not give them what they’re asking, the scam would probably stop here. 

The ask is usually accompanied by some sort of appeal. This appeal could be:

  • An offer to double someone’s money
  • An ‘accidental’ transfer of funds into the wrong account
  • Asking for sensitive information, like a bank account number, as part of security measures the company is taking.

The ask is usually done after trust has been established. Once this step is complete, the con artist has what they need to complete the scam.

The scam

Once the scammer has what they need, the victim is at the scammer’s mercy. 

Hopefully, it stops with just the Venmo transfer. But if personal information, like an email address, was given, then the scammer could see how far they can get with the victim’s other accounts.

Types of Venmo scam victims

Once you understand how scams work, it’s easier to identify a potential Venmo scam. But you also have to understand the scam victims that con artists are targeting.

Scammers, by nature, are masters of emotional manipulation. And for every type of emotional vulnerability, a good scammer will have a trick up their sleeve.

Good Samaritans

If you’re the kind of person who feels compelled to ‘save people,’ you might get a sob story. This especially works if a Venmo scammer can convince you that they are someone you know, or someone you might have a connection with.

People who don’t trust easily

If you’re reluctant to trust strangers, someone might bend over backwards to appear trustworthy. This might take some time, but some scammers are willing to play the long game.

Greedy people

If you’re always trying to figure out ‘how to hack something,’ then you might fall for offers of quick cash. Or ‘something for nothing’ might do you in.

It seems like the oldest trick in the book. But if people stopped falling for it, then it would have been retired a long time ago.

People who want to do the right thing

That ‘accidental deposit?’ That’s intended to appeal to the kind of person who would pick up a wallet and look for the owner.

Scammers win by building trust in their victims and appealing to their emotions. Always keep your guard up to avoid issues.

Examples of Venmo Scams

This example comes from the top of Venmo’s ‘Common Scams’ page. We’ll take a closer look so you can understand how the con artist initiates contact, sets up the ask, and how you can avoid it.

Fake Prize/Fake Reward

Initiating contact

Scammer sends text message or email with a link saying that the victim has ‘won’ money from Venmo. 

The ask

Scammer will ask the victim to log into their Venmo account or ‘validate’ their Venmo account information by using their log-in credentials. 

What the victim might not know is that the provided link is a disguised link, and simply will provide the scammer with the victim’s log-in credentials.

How to avoid

Do not provide Venmo credentials anywhere except to valid Venmo accounts, either online or through social media. 

Venmo’s article also includes the actual links & social media accounts that belong to Venmo. These should be the only accounts that any Venmo accountholder uses. 

Do not trust links that are not provided by an official Venmo source.

Other scams on Venmo’s ‘Common Scams page’

Venmo’s ‘Common Scams’ page also includes the following:

  • Phone call pretending to be Venmo customer service
  • Phone call pretending to be ‘tech support.’ This could be an inbound phone call, or outbound one. An outbound call would be one where an unsuspecting victim might attempt to contact a company that they work with, but use contact information from an old email.  Unbeknownst to the victim, that email contains links or phone numbers directing the victim to the scammer).
  • Sales terms not in accordance with Venmo’s terms & conditions of sales. This page goes into more depth about  how to use Venmo to buy or sell merchandise (https://help.venmo.com/hc/en-us/articles/217532097),
  • Money requests. These are usually by someone posing as a friend, family member, or acquaintance.
  • Paper check scams
  • Romance scams

Scams not listed on Venmo’s website

Below is a list of schemes that Venmo scammers use, not included on Venmo’s website. We’ll go through how each scam is set up, types of victims who might fall for the scam, and how to avoid it.

Pyramid scheme

A pyramid scheme is not a new scam. You may have heard of this referred to as a Ponzi scheme, money circle, or cash wheel.

Setup

The scammer might ask you to Venmo $200 this week, with a promise to repay you $2,000 in a week. 

Potential victims

People who believe that you can get something for nothing.

How to avoid

When something feels too good to be true, it is. Trust your feelings and ignore it. 

Accidental money transfer

In this scam, a lot of these transfers are done with stolen credit card numbers. But when you send the money back, the ‘reimbursement’ goes to the scammer’s own card.

Worst of all, the credit card transactions are eventually tracked to your Venmo account. The stolen money is reimbursed to the right Venmo account. But you’re the one who loses out.

Setup

Checking your Venmo account, you might be pleasantly surprised to find an extra $500 in your account. You have no idea where it came from. 

Then you get a message from someone saying that it was an honest mistake. The person says that Venmo’d the money to the wrong person. Then the sender asks for you to transfer the money back. 

Targeted victims

Good Samaritan

How to avoid

Ignore the request. Contact Venmo customer support so they can start an investigation. Leave funds in the Venmo account until the investigation is complete.

Requesting funds with a fake link

This is a variation on a scam called a phishing scam. Phishing scams are when someone sends an email with a hyperlink and instructions to click the hyperlink. When you click, it takes you to a website that the scammer designed.

This is a variation on phishing known as ‘smishing.’ Instead of email, smishing attempts to get you to click a link via text message.

Setup

You receive a message on your phone to go to a legitimate looking account. The hyperlink takes you to a fake site, where you provide your log-in credentials to the scammer. 

Targeted victims

People who aren’t careful. People who aren’t paying attention to links that they click.

How to avoid

Never provide Venmo log-in credentials to a site or app that is not owned by Venmo. 

In person texts

Setup

Have you ever been in an emergency and asked a complete stranger if you could use their phone to make a call? 

What if someone came up to you and asked to use their phone so they could send a ‘quick text?’ What they might be doing is logging into your Venmo app and sending themselves a Venmo payment from your phone. 

Targeted victims

This is a relatively new Venmo scam, so a lot of people might be susceptible. Especially people who don’t think a scammer can do much while they’re watching. They can.

How to avoid

Be watchful for someone who wants to access your unlocked phone.

How Can I Avoid Being the Victim of a Venmo Scam?

While these Venmo scams seem daunting, they all have something in common.

The scammer needs you, the victim, to do something specific in order to complete the scam. If that action isn’t completed, then the scam doesn’t work.

And an easy way to avoid being the victim of a Venmo scam is simply to not give the scammer what they want.

Here are some tips:

Enable multi-factor authentication.

Installing extra layers of security like multi-factor authentication should be a standard practice for any financial account. If you don’t know what multi-factor authentication is, that’s okay.

Do you know how sometimes a log-in will require you to enter a code that has been texted to you, or sent to you via email? That’s multi-factor authentication.

This assures that if someone steals only one piece of crucial information, they can’t go further. The account remains locked, unless the person has your phone or has hacked your email.

Only conduct transactions with people that you know and trust.

This is a no-brainer, but it’s amazing how scammers can develop a relationship with complete strangers. Don’t fall for it.

Link your credit card to your Venmo account instead of your bank account.

Doing this should provide better fraud protection. If money disappears from your credit card balance due to a stolen credit card number, then the credit card company is on the hook to get that money back. And these companies have a LOT of available resources to do just that.

However, if money disappears from your bank account, then the onus is on you to get your own money back.

Don’t use Venmo to buy or sell items.

Venmo literally says this on their website.

Unless you’re a merchant (i.e. you’re in the business of selling merchandise), you should not be using Venmo to transfer money in exchange for goods or services.

If you’re going to transfer money online, you need to use a secure exchange system like PayPal. Although it’s owned by PayPal, Venmo does not offer protection.

Don’t click on links you don’t recognize, especially if they ask for personal information.

Sometimes scammers will send a link that appears to be from Venmo. The link will send you a website asking to verify personal information, like a credit card number.

What really happens is that you’re providing key pieces of information to complete the Venmo scam. You can avoid this by going directly to the Venmo website or app to verify that the request is legitimate.

Don’t let anyone use your phone.

If someone that you don’t know asks to use your phone, don’t let them. You can make a phone call or send a text on their behalf, but don’t actually give them your phone.

Leave strange deposits in your account.

If a weird deposit appears in your Venmo account, leave it there. Do not respond to any inquiries about returning the deposit.

If you feel compelled to do something, report the strange transaction to Venmo. Venmo will eventually resolve any issues, even if you don’t report them.

As long as you leave it alone, the money will eventually be taken out of your account without leaving you high and dry.

Beware of get-rich-quick schemes or pyramid schemes.

If it sounds too good to be true, it is.

Conclusion

As digital wallet apps become more and more mainstream, Venmo appears to be on the leading edge of all the digital wallet vendors. And while there are numerous opportunities, there are also risks. These risks should not deter you from using Venmo to help make your life a little easier.

A little education, some common sense, and an ounce of prevention are all it takes to keep Venmo scammers at bay.