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Seller Warned to Avoid Using Money Transfer App to Take Payment From Strangers

The money transfer app Venmo, which is very popular these days, especially among millennials, allows users to send or receive money by linking to a credit card or bank account, but experts say make sure you know who you’re dealing with when you use it.

NBC 6 found some users who said they got digitally burned after using the app.

Alex Wilburn was selling his 2001 Acura on Craigslist. Wilburn said a man who responded to his ad sent him $1,800 via Venmo even before meeting up to see the car in Washington, D.C.

"This person was very eager to buy the car, and I met him right here at the mall,” Wilburn said. "The way Venmo works is if somebody transfers you money, you see it in your account and you think it's there to stay."

Wilburn said he signed the title over to the man and even helped him replace the tags, but 12 hours later, Wilburn got a surprise. He said he received an email from Venmo saying the payment had been stopped.

“I actually saw the money out of the Venmo account reversed and sent back," Wilburn said. "Yeah, I couldn't believe it."

NBC 6 heard from other users around the country with a similar story, including Nick in New York City who was selling iPhones online during the holiday season.

"Asked me to meet him in Manhattan and said they could only pay through this app called Venmo," Nick explained.

He said he watched the guy transfer $5,400 into his account right there on the street.

"It came into my account, said it was successful, so I transferred it in front of him into my bank account," Nicks said.

But the next day he too got an email saying the transaction was canceled. By that time he was out both the phones and his money.

“I got screwed," Nick said.

The Better Business Bureau recently posted a warning about scammers using Venmo.

"These apps are really, you know, they're breeding grounds for these scammers," said Kelsey Owen of the Better Business Bureau. "These scammers find something that's popular, and they're going to try to work it."

Owen told the I-Team anyone using Venmo should treat it like a check.

"Really, you need to remember that there is that delay," Owen said. "There's those days in between when the transaction was put in and when they're taking that money from the buyer's account and putting it into yours."

That’s why it’s best not to use the app for big ticket items, she said.

But some users, like Fatima Hasan in San Jose, didn’t know that.

“People think it's instantaneous, and it's actually not," Hasan said.

She and her brothers were selling three football tickets online.

"We're season ticket holders for the 49ers, so it was for the 49ers and Patriots game on TV," she said.

She said after the buyer transferred $900 to them on a Saturday in November, she sent him the tickets. But one day after the game, she said, the man canceled the payment.

"I'm mad. I'm very mad that Venmo didn't do anything," Hasan said.

A Venmo spokesperson told NBC 6 there is no buyer or seller protection when using the app. Josh Criscoe said the app is designed for payments between friends and people who trust each other. Venmo's user agreement states, "Personal accounts may not be used to receive business, commercial or merchant transactions." Any business usage of Venmo requires an application and explicit authorization, Criscoe added.

Venmo told NBC 6 it recently implemented alerts within the app designed to protect users and discourage activity that violates its user agreement, but it’s really up to users to protect themselves, Owen said.

"Your transactions on Venmo should really be done with people that you can trust and really not even just people that you've met, people that you know that are going to be good for the money," she said.

It’s a hard lesson learned for Wilburn.

“You've got to read those things to really actually know what you're using," Wilburn said.

He said he wishes he had gone the old fashioned route when trying to sell his car: Cash. He never saw his car again.

"On the bright side, it was a really old car that needed to go, and then I guess somebody took it off my hands for free is the way I look at it," he said.

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