Venmo Class Action Lawsuit 2026, Active Lawsuits, Closed Settlements, and What Affected Users Can Do Now

Multiple class action lawsuits and active legal investigations involve Venmo and its parent company, PayPal, Inc., as of February 2026. Allegations range from failing to reimburse fraud victims and freezing funds without explanation to charging hidden credit card fees and sending unsolicited text messages. A landmark $58 million Plaid privacy settlement that compensated Venmo users has already closed. One federal class action lawsuit — Al-Ramahi v. PayPal — is actively pending in California court, and two new investigations are gathering potential class members right now.

Quick Facts

• Defendant: PayPal, Inc. (parent company of Venmo)
• Active Federal Lawsuit: Al-Ramahi v. PayPal, Inc., Case No. 5:22-cv-03632 (N.D. California) — fraud reimbursement and undisclosed security risks
• Active Investigations: Hidden credit card cash advance fees; Washington State unsolicited referral texts (CEMA)
• Closed Settlement: Plaid, Inc. $58 million privacy settlement — claim deadline passed April 28, 2022; no new claims accepted
• Prior Regulatory Action: FTC settled with Venmo in 2018 over deceptive fund availability disclosures
• Who May Be Affected: U.S. Venmo users who experienced fraud losses, frozen accounts, withheld funds, credit card cash advance fees on Venmo transfers, or Washington residents who received unsolicited referral texts
• Open Claim Form: None as of February 2026 — existing investigations are in pre-litigation stage
• Official Case Source: U.S. District Court, Northern District of California (PACER)

Current Status: What’s Open, What’s Closed, and What Happens Next

As of February 2026, there is no open settlement claim form for Venmo users. Here is the status of each matter:

Active federal lawsuit (Al-Ramahi v. PayPal): Filed June 2022 in the Northern District of California. The case alleges Venmo fails to reimburse fraud victims and conceals security risks from users. Discovery is ongoing. No settlement has been announced. This case is the most significant active litigation affecting U.S. Venmo users nationwide.

Credit card cash advance fee investigation: Attorneys are gathering evidence and potential class members regarding banks charging unexpected cash advance fees when users send money through Venmo with a credit card. No lawsuit has been filed yet as of January 2026, but the investigation is active.

Washington State referral texts investigation: Attorneys are investigating whether Venmo violated the Washington Commercial Electronic Mail Act (CEMA) by incentivizing users to send promotional referral texts without proper consent. No lawsuit has been filed yet, but a similar Cash App investigation resulted in a $12.5 million settlement in mid-2025.

Plaid $58 million settlement (CLOSED): This settlement compensated Venmo users whose bank account data was collected between January 2013 and November 2021. The claim deadline passed on April 28, 2022. Payments were distributed in 2022–2023. No new claims can be filed.

2018 FTC settlement (CLOSED): The Federal Trade Commission settled with Venmo over deceptive fund availability disclosures and inadequate privacy practices. This was a regulatory action — it changed Venmo’s required disclosures but did not provide monetary compensation directly to consumers.

What the Lawsuits and Investigations Allege

1. Fraud Reimbursement Failures (Active Federal Case)

In June 2022, plaintiff Mohammad Al-Ramahi filed a class action in California federal court alleging that PayPal/Venmo fails to reimburse customers who are defrauded while using Venmo. The lawsuit argues that Venmo falsely markets itself as a safe platform while concealing serious undisclosed security risks.

The case argues that the Electronic Fund Transfer Act (EFTA) — a federal law that protects consumers making electronic payments — entitles fraud victims to reimbursement. Venmo has reportedly structured its service to classify transfers as person-to-person payments rather than commercial transactions, which it uses to avoid those legal protections. The lawsuit contends this classification is improper and that Venmo’s own marketing promises create a legal obligation to reimburse users who lose money to fraud.

Thousands of Venmo users have publicly reported that Venmo denied their fraud disputes outright or provided no recourse after unauthorized transfers cleared their accounts.

2. Frozen Accounts and Withheld Funds (Investigation Stage)

A separate ongoing investigation by Shamis & Gentile P.A. focuses on Venmo’s practice of freezing accounts and holding funds — sometimes for 180 days or longer — without explanation. Users have reported being locked out of accounts holding thousands of dollars, including one widely cited case involving $36,000 that Venmo allegedly refused to return after closing the account.

The 2018 FTC settlement previously required Venmo to make clearer disclosures about when and why funds could be frozen. However, consumer complaints about frozen accounts have continued at significant volume in the years since that settlement, suggesting the issue remains unresolved for many users.

Potential legal claims in this investigation include breach of contract, violation of the Electronic Fund Transfer Act, and various state consumer protection laws.

3. Hidden Credit Card Cash Advance Fees (Investigation Stage)

Attorneys are investigating whether credit card companies are illegally charging “cash advance fees” — typically a percentage of the transaction plus immediate interest — when users send money through Venmo using a credit card, even though these are peer-to-peer transfers, not cash advances in the traditional sense.

Consumer Financial Protection Bureau (CFPB) complaints show users discovered these fees only after reviewing statements. One consumer reportedly sent $500 through Venmo via credit card and was charged $25 in cash advance fees plus immediate interest, with no disclosure at the time of the transaction. Attorneys believe this practice may violate state consumer protection and false advertising laws.

4. Washington State Referral Texts (Investigation Stage)

Attorneys are investigating whether Venmo’s “Invite Friends” referral program violates Washington’s Commercial Electronic Mail Act (CEMA) by incentivizing existing users to send unsolicited promotional texts to friends and family without proper consent. Under CEMA, recipients of illegal text messages could be entitled to up to $500 per violation. The investigation is modeled after the Cash App CEMA case that settled for $12.5 million in 2025.

5. The Plaid Privacy Breach (Settlement Closed)

Between 2013 and 2021, Plaid Inc. — the third-party technology company that connects Venmo accounts to users’ bank accounts — allegedly used login screens that mimicked the appearance of users’ own bank portals. When users entered their credentials thinking they were logging into their bank, Plaid captured those credentials and used them to collect sensitive financial data including transaction history, salary information, and investment records. This data was then used commercially.

A $58 million class action settlement resolved these claims. Payments were distributed in 2022–2023. That settlement is now fully closed.

Who Could Be Affected

Al-Ramahi fraud lawsuit (active): Venmo users anywhere in the United States who suffered unreimbursed losses due to fraud on the Venmo platform, or who were affected by Venmo’s undisclosed security risks.

Frozen accounts investigation: Venmo users whose accounts were frozen, whose funds were withheld for extended periods (especially 60 days or more), or whose accounts were closed with funds withheld — particularly between 2018 and the present.

Credit card cash advance fee investigation: Venmo users in the United States who used a credit card to send money through Venmo and were subsequently charged cash advance fees or immediate cash advance interest by their credit card issuer.

Washington referral texts investigation: Washington State residents who received text messages from friends or family members inviting them to join or use Venmo as part of a referral program. You must still have the message saved.

Plaid settlement (closed): Venmo users whose accounts were accessed by Plaid between January 1, 2013 and November 19, 2021. This claim period is closed — no new claims can be submitted.

Settlement Details and Compensation

As of February 2026, there is no open Venmo settlement with an active claim form. The key points for each matter are:

The Plaid $58 million settlement is the only completed, compensated settlement directly involving Venmo users. It closed in 2022. No further claims can be filed.

The 2018 FTC settlement required Venmo to change its disclosure practices. The FTC does not provide monetary compensation to consumers through this type of regulatory settlement.

For the active Al-Ramahi federal lawsuit, if a settlement is eventually reached, it would likely create a claims process for a nationwide class of Venmo fraud victims. No settlement timeline has been announced.

For the ongoing investigations (frozen accounts, cash advance fees, Washington texts), these are pre-litigation matters. Attorneys are still gathering evidence and class members. If they result in class action lawsuits and then settlements, a claims process would follow — potentially taking one to several years.

What Venmo Users Should Do Right Now

Even though no claim form is currently open, the most important thing affected users can do is preserve documentation. If any of these investigations result in a filed lawsuit or settlement, documented proof of harm will be required to file a valid claim. Save and preserve the following now:

For fraud victims: screenshots showing your Venmo balance before and after the disputed transaction; all communications with Venmo support; your dispute submission and Venmo’s response; bank statements showing the loss.

For frozen account users: screenshots of error messages, frozen balance notifications, or account closure notices; all emails and in-app messages from Venmo; bank statements showing any overdraft fees or late fees caused by the frozen funds; a written record of dates when funds were expected but not available.

For credit card cash advance fee victims: credit card statements showing the cash advance fees and interest charges; the date and amount of the Venmo transaction; any communication with your credit card issuer about the fees.

For Washington referral text recipients: the text message itself (screenshot it and back it up); the date it was received; the phone number it came from.

Users can also file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint or with the FTC at ftc.gov/complaint. The CFPB has taken major enforcement action against similar payment apps — in January 2025, it ordered Cash App’s parent company Block, Inc., to pay up to $120 million in refunds and a $55 million penalty for failing to prevent fraud and misrepresenting consumer protections. Venmo users facing similar issues should create a formal record through both agencies.

Important Note on Venmo’s Arbitration Clause

Venmo’s current Terms of Service include a mandatory arbitration clause and a class action waiver. This means Venmo users who agree to the Terms of Service generally cannot bring claims against Venmo in regular court or as part of a class action — they are typically required to pursue disputes through individual arbitration.

However, there are important exceptions. Attorneys pursuing mass arbitration can file many individual arbitration claims simultaneously, which functions similarly to a class action in terms of volume and pressure. Some state laws may also override arbitration agreements in certain circumstances. The Al-Ramahi case was filed in federal court and is testing the scope of these limitations. Anyone affected by Venmo’s practices should consult a consumer rights attorney to understand their options given the arbitration clause.

Prior Related Cases and Industry Context

Venmo is not the only payment app to face consumer protection litigation. The pattern of cases involving frozen funds, inadequate fraud protection, and hidden fees is widespread across the peer-to-peer payment industry.

The Cash App/Block CFPB action in January 2025 resulted in up to $120 million in consumer refunds for similar fraud protection failures. The Robinhood CEMA settlement in 2024 for $9 million involved identical referral text violations to what Venmo now faces in Washington State. Zelle has faced congressional scrutiny and consumer complaints regarding fraud reimbursement that parallel the Al-Ramahi allegations against Venmo.

These parallel cases suggest that regulators and courts are increasingly skeptical of the “person-to-person payment” classification that payment apps use to deny fraud reimbursements — a classification that the Al-Ramahi lawsuit directly challenges.

Frequently Asked Questions

What is the Venmo class action lawsuit about? 

Multiple class actions and investigations involve Venmo as of 2026. The most significant active federal lawsuit — Al-Ramahi v. PayPal, Case No. 5:22-cv-03632 — alleges Venmo fails to reimburse fraud victims and hides security risks. Separate investigations target frozen accounts, hidden credit card fees, and unsolicited referral texts.

Is there an open Venmo settlement I can file a claim for? 

No. As of February 2026, there is no open Venmo settlement with an active claim form. The $58 million Plaid settlement, which compensated Venmo users for privacy violations, closed in April 2022. Current matters are either in active litigation or investigation stages.

What is the Plaid settlement and can I still file?

 Plaid Inc. agreed to a $58 million settlement over allegations it collected Venmo users’ bank data without proper consent between 2013 and 2021. The claim deadline passed on April 28, 2022. Payments were distributed in 2022–2023. You cannot file a new claim for this settlement.

Who may be eligible if the Al-Ramahi case settles? 

Venmo users nationwide who suffered unreimbursed fraud losses or who were harmed by Venmo’s undisclosed security risks would likely be included in the class, based on current allegations. No settlement has been announced. The case is ongoing.

What should I do if Venmo froze my account or refused my fraud dispute? 

Document everything now — screenshots, emails, bank statements, and dates. File a complaint with the CFPB at consumerfinance.gov/complaint and with the FTC at ftc.gov/complaint. Consider consulting a consumer rights attorney, as individual arbitration may be an available option under Venmo’s current Terms of Service.

What is the Washington State referral texts investigation? 

Attorneys are investigating whether Venmo violated Washington’s Commercial Electronic Mail Act (CEMA) by incentivizing users to send unsolicited referral texts. Washington residents who received such texts may be eligible for up to $500 per message if a lawsuit is filed and successful. This has not been filed as of February 2026.

Where can I find official information about the Al-Ramahi case?

 The case is filed as Al-Ramahi v. PayPal, Inc., Case No. 5:22-cv-03632, in the U.S. District Court for the Northern District of California. Case documents are publicly available through PACER at pacer.gov.

Will Venmo’s arbitration clause prevent me from joining a class action? 

Venmo’s Terms of Service include a mandatory arbitration clause that limits traditional class action participation. However, mass arbitration and individual arbitration remain options for many users. Some state laws may also provide exceptions. A consumer rights attorney can advise on your specific situation.

Additional Context: Payment App Consumer Litigation Trends

Consumer litigation against peer-to-peer payment apps has accelerated significantly since 2022. The core legal tension in many of these cases — including the Al-Ramahi lawsuit against Venmo — is whether payment apps can classify transfers as informal person-to-person transactions to avoid the fraud reimbursement obligations that apply to traditional electronic fund transfers under the EFTA. Courts and regulators are increasingly examining this classification. The CFPB’s January 2025 enforcement action against Cash App signaled that federal regulators are willing to impose significant penalties when payment apps misrepresent their consumer protections. Venmo users facing similar issues have a stronger regulatory backdrop to support potential claims than existed even two years ago.

Last Updated: February 28, 2026

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.
Read more about Sarah