Consumer complaint received 2022-12-21
Company: Paypal Holdings, Inc
State: FL
Product: Money transfer, virtual currency, or money service
Sub-product: Mobile or digital wallet
Issue: Unauthorized transactions or other transaction problem

Complaint:
The company is PayPal and the application causing the problem ( for me ) is Venmo. As you may be aware the IRS change the the reporting rules for companies involved in Person to Person Payments such as Venmo, PayPal, XXXX XXXX, etc. As a result if a customer of XXXX of these companies receives a payment for " good and services '' and those payments ( for goods and services ) within the same calendar year have a cumulative total of {$600.00} or more, the Company ( in this case Venmo ) is required to report that total amount to the IRS and issue the customer a XXXX. 

This situation is I have XXXX transactions on my account where friends of mine were paying me back for money they borrowed from me ( as I paid the entire bill for the event or function we attended together ) and they mistakenly mark the payments on Venmo for " good and services '' vs " friends and family ''. As you may know, the receiver of funds on Venmo ( in this case me ) has no control over how a sender marks or codes a payment and is not able to see it until it hits the account. The only way they know it was marked ( in this case inaccurately ) is when the transaction has hit the account because Venmo charges the receiver a fee for payments they receive for goods and services. 

I had XXXX payments from friends that were sent to me in XXXX where my friends mistakenly marked those payments for good and services and I noticed it when I saw the net payment amount was lower than what they owed me as a result of the transaction fee Venmo charges for payments for goods and services ( there is not transaction fee charged for payments to friends and family ). The XXXX payments in question are : XXXX from - XXXX for {$1600.00} on XX/XX/XXXX XXXX from - XXXX. for {$500.00} on XX/XX/XXXX XXXX from - XXXX. for {$1300.00} on XX/XX/XXXX Venmo reversed the transaction fee charged on these payments for goods and services because after they reviewed them and with speaking to me and in XXXX case ( XXXX ) they realized the payments were marked in error by the sender and the payments should have been marked friends and family. However, they will not adjust their system to move these payments that were marked in error to the correct category and now they are going to knowing report in error to the IRS the cumulative total of these payments {$3400.00} and issue me a XXXX. You can imagine the problems this is going to cause. I do not sell good or services on line or to anyone else. I do not have a company that does either. This is essentially my money that I've already paid taxes on being given back to me by a friend because I paid the entire bill in total as a convenience to the group ( I essentially loaned the money to them ) and they paid me back. 

My complaint is as follows : -Payments sent to me automatically hit my account without any approval from me. Therefore, I have no way of knowing if the sender mistakenly codes them incorrectly until after they have hit the account. If a mistake like this is made it's 100 % out of my control. 

XXXXVenmo recognized the payment was mistakenly coded as for goods and services and refunded the transaction fee they charge for payments for goods and services. Therefore they know it's a mistake as well. 

-Even though they have acknowledged the payments were not coded accurately ( by refunding the transaction fee ) they are going to still report the cumulative total of those payments to the IRS XXXX as payments received for goods and services. 

I believe XXXX things should happen. First and foremost if Venmo acknowledged the payments were coded incorrectly as payments for goods and services ( by their actions of refunding the transaction fee ) then they should adjust those payments in their system as well and not knowingly report inaccurate data ( the total of these payments ) to the IRS. By issuing me a XXXX with inaccurate data, it is going to cost me time, money, and grief in working with the IRS to resolve this issue. 

Secondly, the system at Venmo should have some sort of confirmation process where the receiver of a payment can verify the accuracy all payments before those payments hit their account. If Venmo has made the decision to not recode payments once they hit a customers account, regardless of the accuracy of how those payments are covered then they need to create a process so the consumer can protect themselves from potentially have a mess on their hands with their taxes and the IRS. 

I have spoken to the representatives at Venmo multiple times and they are staying they can not adjust these payments that were coded incorrectly by the sender, even-though they acknowledged they are not accurate ( by refunding the transaction fee they charge on payments for good and services ) and they will send that inaccurate reporting to the IRS and XXXX me an inaccurate XXXX as well. I know they can make the adjustment on the coding of the payment to correct it, but they are choosing not to. Why Venmo is knowingly sending inaccurate data to the IRS that is negatively impacting their customers is alarming to me and I would think it would be alarming to the CFPB as well.

Company response to consumer: Closed with explanation