Venmo Class Action, Users Sue Over Fraud Losses Venmo Refuses to Repay

A proposed nationwide class action lawsuit, Al-Ramahi v. PayPal, Inc., filed June 21, 2022, in U.S. federal court in California, alleges that Venmo’s parent company PayPal markets Venmo as a safe payment app while hiding a serious fraud problem — and then refuses to reimburse users who lose money to scams. The case is active. No settlement has been reached.

Quick Facts

What Actually Happened?

Venmo is one of the most widely used payment apps in America. Users sent over $230 billion through the platform in 2021 alone. Venmo markets itself as a fast, easy, and safe way to send money to friends, family, and businesses.

Plaintiff Mohammad Al-Ramahi, a San Jose resident, fell victim to an employment scam in April 2020. He received what appeared to be a legitimate job-related check for $4,950, and sent two payments of $2,450 back to the supposed company — one of which went through Venmo. When the check turned out to be fraudulent, he asked PayPal to refund the $2,450. According to the complaint, the company refused.

Al-Ramahi filed a proposed class action in California federal court on June 21, 2022. His lawsuit argues that what happened to him happens to millions of Venmo users — and that Venmo deliberately hides this risk while advertising the app as safe.

What Does the Lawsuit Allege?

The complaint alleges that PayPal operates a secret internal policy to deny all fraud reimbursement claims on Venmo — no matter how clearly the fraud is reported or documented. According to the complaint, this policy exists because Venmo’s architecture makes every transfer instant and irreversible, meaning that once money leaves an account, the company claims it cannot be recovered. The lawsuit argues Venmo uses this design feature as justification to deny liability, even when users report fraud promptly.

The complaint further alleges Venmo’s marketing materials — including claims that Venmo is a “safe way for consumers to send money” — create a false impression of protection that the company never intends to honor. The lawsuit cites research from Javelin Strategy & Research showing that nearly 18 million consumers fell victim to scams on person-to-person payment apps in 2020 alone, and argues PayPal knew about this fraud problem but chose not to warn users. According to the complaint, unlike credit cards, traditional bank transfers, or even PayPal’s own main platform, Venmo offers consumers virtually no fraud recourse.

The complaint alleges that users who report fraud to Venmo are routinely denied with no investigation, no appeals process, and no explanation. It argues that money sent through Venmo is, in its own words, “gone forever, without recourse, reimbursement, or protection” — and that Venmo never discloses this reality at sign-up.

What Laws Were Allegedly Violated?

According to the complaint, the lawsuit claims PayPal violated the following laws:

• Electronic Fund Transfer Act (EFTA) — A federal law that protects consumers who send money electronically. The complaint argues the EFTA legally requires PayPal to reimburse users for unauthorized fraudulent transfers, and that Venmo’s refusal to do so violates this federal consumer protection.
• Breach of Contract — The complaint claims Venmo’s own terms of service and marketing promises create a legally binding agreement to provide a safe platform. By denying fraud claims, the lawsuit alleges PayPal broke its own contract with users.
• Breach of Covenant of Good Faith and Fair Dealing — A legal obligation attached to every contract in California that requires both parties to act honestly and not undermine the other’s benefit. The complaint argues PayPal violated this by secretly maintaining a blanket no-reimbursement policy.
• California Unfair Competition Law (UCL) — California’s broad consumer protection law that prohibits unfair, unlawful, or deceptive business practices. The complaint alleges Venmo’s marketing conduct qualifies as all three.
• California Consumer Legal Remedies Act (CLRA) — A California law that specifically prohibits misrepresenting the nature, characteristics, or qualities of a service. The complaint argues Venmo misrepresented its fraud protections to every user who signed up.

Who Does This Lawsuit Affect?

The proposed class — which a federal judge must still certify — covers Venmo users across the United States. You may be affected if:

• You have or had a Venmo account at any point and sent or received money through the app
• You lost money to fraud, a scam, or an unauthorized transaction while using Venmo
• You reported that fraud or loss to Venmo or PayPal and were denied reimbursement
• You are a member of a California subclass if you reside in California and experienced the above
• Your losses occurred at any point covered by the applicable statute of limitations — no specific date range is listed for the nationwide class in publicly available documents

No action is required right now. Save any documentation of your dispute — screenshots of your Venmo transaction history, any emails or in-app messages from Venmo denying your claim, bank statements showing your loss, and any written record of dates and amounts. These may matter if a settlement is reached.

What Is Venmo Saying?

PayPal initially responded to the lawsuit by telling Payments Dive in June 2022 that the company was “reviewing the complaint.” No further public statement from PayPal or Venmo addressing the specific allegations in this lawsuit has been confirmed as of March 19, 2026.

PayPal’s general position — reflected in Venmo’s current terms of service — is that person-to-person transfers on Venmo are treated as direct payments between individuals. Under that framing, the company generally considers completed transactions non-refundable, and classifies most disputed transfers as authorized payments rather than fraud eligible for reimbursement. This is the core legal disagreement the Al-Ramahi lawsuit is testing in court. No court has ruled on these arguments, and no finding of liability against PayPal or Venmo has been made.

What Happens Next?

• Discovery continues. Both sides exchange evidence — including internal PayPal communications, fraud dispute records, and user data. Discovery in a complex financial case like this can take one to two years or more.
• Class certification hearing. A federal judge must decide whether the proposed class meets the legal requirements to proceed as a group lawsuit. This is the most significant milestone remaining. If class certification is denied, the case cannot proceed as a class action.
• PayPal may file further motions. The defense can challenge the case at multiple stages, including motions to dismiss specific claims or to compel individual arbitration rather than class litigation — an argument Venmo’s terms of service appear designed to support.
• Settlement negotiations or trial. If the class is certified, both sides may negotiate a settlement at any point. If no deal is reached, the case proceeds toward trial. The vast majority of certified class actions settle before trial.
• Timeline. This case was filed in June 2022 and remains in active litigation as of March 2026. Consumers should not expect a resolution in the near term.

This page will be updated as the case develops.

Important Case Dates

Frequently Asked Questions

Is the Venmo fraud reimbursement lawsuit real? 

Yes. Al-Ramahi v. PayPal, Inc., Case No. 5:22-cv-03632, is a real active class action filed June 21, 2022, in U.S. District Court in the Northern District of California. The case is in active litigation. No court has ruled on the allegations, and no finding of liability has been made.

Can I file a claim against Venmo right now? 

No. There is no open settlement claim form for this case as of March 2026. The case has not yet reached settlement. Any website currently asking you to submit a claim for this lawsuit should be treated with serious caution.

Do I need a lawyer to join this lawsuit? 

No. If the court certifies the class and a settlement is reached, you will typically receive notice directly and can submit a claim without hiring your own attorney. If you believe you suffered a specific, large financial loss through Venmo fraud, you may want to consult a consumer rights attorney separately to discuss your individual options, including arbitration.

What happens if the case settles?

 If a settlement is reached and approved by a federal judge, a settlement administrator will notify eligible class members with instructions on how to file a claim, the amount you may receive, and the filing deadline. AllAboutLawyer.com will publish full details at that time.

Will I get notified if there is a settlement?

 Venmo has your account information on file, so eligible users may receive direct notice by email. Courts also require public notice through media and a dedicated settlement website. Keeping documentation of any fraud dispute you filed with Venmo will be important for proving your eligibility.

I was scammed on Venmo and Venmo denied my claim. What should I do right now?

 Document everything immediately. Save screenshots of the transaction, your dispute submission, Venmo’s denial message, and the dates of all communications. You can also file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint or with the FTC at ftc.gov/complaint. These agencies track patterns of complaints against payment companies and have taken enforcement action against similar apps in the past.

Does Venmo have any fraud protection at all? 

Venmo’s current terms of service offer limited protection. The company generally treats completed person-to-person transfers as final and non-refundable. Whether this policy complies with federal law — specifically the EFTA — is exactly the legal question the Al-Ramahi lawsuit asks the court to decide. No court ruling on that question exists yet.

How is this lawsuit different from the Venmo Plaid privacy settlement?

 These are separate legal matters. The PayPal Honey lawsuit and the closed Plaid $58 million settlement both involved different claims against PayPal products. The Al-Ramahi lawsuit focuses specifically on Venmo’s alleged refusal to reimburse fraud victims — it involves different plaintiffs, different attorneys, different facts, and different laws.

Sources & References

• Al-Ramahi v. PayPal, Inc., Case No. 5:22-cv-03632 — Justia Docket
• FTC.gov — FTC Venmo Settlement (2018) (official government source)
• CFPB — Consumer Complaint Portal (official government resource for affected users)

Last Updated: March 19, 2026

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Legal claims and outcomes depend on specific facts and applicable law. For advice regarding a particular situation, consult a qualified attorney.

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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