The Cost Of Getting Your Money Back : Planet Money Accidentally sending $1,500 to a stranger on Venmo reveals just how hard it is to get your money back in the new economy.

The Cost Of Getting Your Money Back

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ELAH FEDER, BYLINE: Alexi, a couple of months ago, I did something I'm not super proud of.


Elah Feder of Science Friday's Undiscovered podcast, PLANET MONEY is here to listen to your problems.

FEDER: So recently, I moved into a new place, had to pay my landlord a security deposit - $1,500. And he tells me to pay him with Venmo, which is great. I use Venmo all the time. At least, I did until this happened.

HOROWITZ-GHAZI: That's foreboding, but also very hip on the part of your landlord. For anyone who doesn't know, Venmo is this super easy app on your phone, lets you pay your friends or total strangers, pulls money from your bank account. You can even add little pithy comments or silly emojis to your transactions.

FEDER: So I go to Venmo my landlord. I have his user ID, which is basically his name. His first name is Steven. I'm going to leave off his last name so no one blows up his Venmo account.

HOROWITZ-GHAZI: Makes sense.

FEDER: And because there are a bunch of people with his name - there's Steven1, Steven2. Steven says he's Steven number one. And I see, yes, Stephen1, so I choose that user. I type in the amount - $1,500, no extra zeros - hit pay. And I'm done.


FEDER: Except 30 minutes later, I get a message from Stephen1 saying, pretty sure you have the wrong person. And I'm like, what? I specifically checked this. But I go back. I look, and I see that I've actually made a mistake. Instead of typing Steven with a V, I've written it with a P-H. I just sent $1,500 to a stranger. And I'm like, OK. Give it back. And he says, no. Stephen with a P-H tells me, look. If it's really a mistake, then just get Venmo to fix it. And so I call Venmo. I explain to them what happened. You know, I made this mistake - typo. Can you just cancel this? And this Venmo person says, no. They couldn't just cancel it. And now I'm starting to seriously freak out.


FEDER: Hello, and welcome to PLANET MONEY. I'm Elah Feder.

HOROWITZ-GHAZI: And I'm Alexi Horowitz-Ghazi. Elah, you came to us after you accidentally sent a stranger $1,500.

FEDER: My first thought was, crap.

HOROWITZ-GHAZI: Second thought.

FEDER: Is there a light-hearted economic narrative podcast in this?

HOROWITZ-GHAZI: Good instinct. Today on the show, when should you be able to get your money back? This is a surprisingly complicated question. An envelope of cash is different from a credit card is different from Venmo. And the ways they're different can be a big deal.

FEDER: Especially when you've sent the wrong Steven $1,500.


FEDER: So the core question in the show today is, when should you be able to get your money back? And by you, I mean me. I mean my money.

HOROWITZ-GHAZI: The whole idea that we could even instantly get our money back is actually an invention and not even a very old one. Back in the 1960s, when credit cards were first starting to take off, people with credit cards did not have the power to undo. And it was bad.

CHI CHI WU: They would be charged the wrong amount. They would be double charged. There would be some sort of math error.

HOROWITZ-GHAZI: Chi Chi Wu is a staff attorney at the National Consumer Law Center.

WU: Or someone would take their carding and use it without their consent. And they would try to battle with the credit card companies to get them to fix the error. And the problem was the credit card companies would just ignore them and, in fact, would just, you know, keep demanding payment without addressing the consumer's complaint.

FEDER: So eventually, Congress kicks into action, and they start passing laws. And in 1974, they passed one of the most powerful consumer protections we have ever had. This is an undo button like no other. It's something called a chargeback. A chargeback is...

WU: When you challenge something on your credit card and it gets reversed - it's charged back to the merchant.

HOROWITZ-GHAZI: You can do that if your credit card got stolen and you didn't authorize the charge but also if a store charged you the wrong amount. Now you just go to your bank, dispute the charge. And if you were wrongly billed, they undo it. It's on them to make sure that happens. Not only does that mean I can now get my money back with one call, it also means everybody feels more comfortable using credit cards and uses them more and more, which is good for the credit card companies.

FEDER: So why doesn't Venmo do this for me when I call them? Like, why don't they just undo the transaction? Other people have been asking this too. Last year, there was a story on page one of The Wall Street Journal with the headline "So You Accidentally Sent $149 To A Stranger On Venmo? Good Luck Getting It Back" (ph).

HOROWITZ-GHAZI: One possible reason Venmo doesn't let us get our money back - because when you let us demand our money back, we go wild. We know this because of what's happened with credit card chargebacks. We've started demanding our money when any reasonable person would say we shouldn't get it. It's a chargebacchanal (ph).

FEDER: There are people whose entire job is dealing with these chargebacks, like Katie Cover (ph).

KATIE COVER: There was somebody who had taken this series of golf lessons and then at the end, had disputed that their score hadn't improved a sufficient amount. And they were dissatisfied.

FEDER: Solution.


FEDER: Katie works for Square, which is a company that processes credit card payments. So when you swipe your card or stick your chip in a machine, that machine comes from a credit card processor like Square. They're basically middlemen.

HOROWITZ-GHAZI: Square mostly works with small businesses. And if one of those businesses thinks a chargeback isn't fair, Square helps them fight back to keep the money. In order to do that, they have to convince the bank associated with the customer's credit card.

FEDER: Katie Cover's team spends all day every weekday answering calls, consoling merchants and helping them gather the evidence they need to win the case.

HOROWITZ-GHAZI: Are you guys a team of detectives?

COVER: I would call us a team of chargeback therapists/detectives.

HOROWITZ-GHAZI: Katie's seen some truly ridiculous chargebacks, like the client who rescinded their payment for an allegedly subpar window cleaning three months and several rainstorms after the cleaning in question.

COVER: Like, it got dirty again.

HOROWITZ-GHAZI: That's right.

FEDER: And, of course, there was the case of the floral wedding cake.

COVER: The cake was about $800.

FEDER: One day, Katie got a call from an upset client - a baker.

COVER: She had delivered the cake, and it had been consumed. And she had heard no complaints for them. As far as she knew, they had been totally satisfied. And a few weeks later, she received this payment dispute notification that the couple wanted their money back.

HOROWITZ-GHAZI: And did they say what they were disputing? Or - does that sort of detail come through?

COVER: There were flowers on the cake, and there was some discrepancy on the color of the flowers.

FEDER: The claim was that they were a little too bright.

HOROWITZ-GHAZI: So Katie got to work calming her client down, walking her through all the possible pieces of evidence that could help prove to the bank that the baker had held up her end of the deal.

COVER: She had a chain of email correspondence, where they had agreed on all the details about the cake. And in addition to that, she had posts from social media, where she had taken screenshots. And it was the couple with their guests, celebrating and eating the cake. And there were comments on social media from their guests saying how much they enjoyed it and from the couple saying that they were thrilled, and wasn't it a wonderful cake?

HOROWITZ-GHAZI: What did you think when you first saw the social media post?

COVER: I thought we had it nailed. It was just so blatant. I couldn't imagine that they would be able to get away with getting their money back.

HOROWITZ-GHAZI: Were they, like, smiling with pieces of cake in their teeth and stuff?

COVER: Oh, they were - yeah, you know, feeding each other the bites of cake. They looked to be having a wonderful time.


FEDER: This is infuriating. I'm actually getting worked up a little bit.

HOROWITZ-GHAZI: I'm getting hungry.

COVER: (Laughter).

FEDER: With Katie's help, the baker got to keep the money. The bank decided in her favor. Katie also told us this one other story about a small, family-owned construction company that had done a really expensive remodel of a home and then the customer charged back tens of thousands of dollars. The business lost the case and had to shut down.

HOROWITZ-GHAZI: And even when businesses do win, there's a cost to fight it. Katie's salary comes out of the fees businesses pay to use Square as their credit card processor. And this isn't just a Square thing. Every business pays fees to accept credit cards. And often, there are extra fees for chargebacks. And businesses pass all of those fees onto us in the prices they charge, so there is a cost to the power to undo that we are all paying.


FEDER: After the break, I try to get back that $1,500 I Venmoed (ph) Stephen - P-H Stephen with a P-H.


FEDER: So back to my Venmo story. To recap, I accidentally sent $1,500 to Stephen with a P-H because of a typo. Stephen had said to call Venmo, which I did. I asked them to cancel it. And now, if this had been a credit card payment, that would have been it. You know, I'd call Venmo. I'd get a chargeback. It would have been done. But Venmo is not a credit card. They tell me that's not how this works.

HOROWITZ-GHAZI: No chargebacks.

FEDER: No chargebacks - Venmo tells me they can't cancel a payment without Stephen's permission, so they say they'll email him. He says he doesn't get the email. I call them again. They email again. And again, he says he didn't get it. And I start crying on the phone to Venmo a little bit. But when I was done freaking out, you know, I asked Venmo one more time - this time as a reporter not as a disgruntled or weepy customer. I asked them, well, OK. Why do you do it this way? Why don't you give people an undo button, you know, that equivalent of a chargeback? They didn't want to talk on tape for this story, but they did say in an email that, quote, "making funds instantly available to recipients is part of why customers love using PayPal and Venmo," end quote. By the way, Venmo is owned by PayPal. And they also said they're in line with what other apps are doing.

HOROWITZ-GHAZI: And that is reasonable enough. An undo option would kind of suck in a way. Imagine cash work like this. You know, you go out to a fancy meal with your friend. You pay the check. Your friend gives you 20 bucks for their end of the deal. And then when you get home, you open your wallet. And all of a sudden - poof. The $20 is gone.

FEDER: That would suck.

HOROWITZ-GHAZI: Undo buttons are great for the person hitting undo, but they can be pretty rotten for the person on the other side.

FEDER: Venmo actually also said that they do all kinds of things to stop people from making mistakes in the first place, like they get people to post profile pictures or they'll flag any payments to someone that you've never paid before. In my case, none of that stuff would have actually helped. But, you know, I could see how it would help somebody. Anyway, I think there's actually more to this. You know, I think part of the reason they don't have an undo button has to do with the way that Venmo's core business works and how it's actually fundamentally different from the way that credit cards do business.

HOROWITZ-GHAZI: Every time you buy something with a credit card, the business selling you that thing has to pay fees. And part of those fees pay for the Katie Covers of the world to deal with chargebacks. Venmo, on the other hand, does not charge a fee when you send money to a friend or your landlord or a stranger you think is your landlord.

FEDER: Thanks.

HOROWITZ-GHAZI: But also no chargebacks.

FEDER: Yeah, so there's a tradeoff here. You know, you pay a fee, maybe you get an undo button. You get that chargeback, or you don't pay a fee, and you're kind of stuck with the payments you make.

HOROWITZ-GHAZI: So how does Venmo make money? They don't - at least they don't when ordinary people send money to each other using their bank accounts. Venmo does charge fees for some premium features, like faster bank transfers and using Venmo to pay some vendors directly. It also charges transaction fees to some merchants who use Venmo.

FEDER: Bottom line, Venmo was not going to fix this for me. It was up to Stephen to actually give me my money back. And the only way that I had to contact him was by actually messaging him through the Venmo app. So I did. I actually messaged him 18 times on that first day.


FEDER: Oh, yeah. I'm going to pull up the thread on my phone. So Alexi, there's that back-and-forth I mentioned earlier, where Stephen lets me know that I should go to Venmo, get them to undo it. I get back to Stephen. And here's the distilled version of what happened. Me - Venmo has just contacted you. Stephen - they have not. Me - I would really like to resolve this with dignity and without escalation. This is legally my money. Stephen - look, whoever you are, I am not keeping your money. You sent it to the wrong person, and I did the right thing by letting you know. As long as Venmo contacts me, I have no problem sending it back.

So basically, I am freaking out. I mean, you can tell from (laughter) my writing. I'm, like, insinuating I'm going to sue him. I'm having a meltdown. And finally Stephen says, look - why don't you just call your bank and have them cancel it? So I'm pretty sure this is the first moment I actually logged into my bank account. And that's when I saw the $1,500 was still there. I'd had my money the whole time.

HOROWITZ-GHAZI: There's this weird thing going on, like, inside the Venmo universe. When you Venmo money to a friend or whoever, it appears in your friend's Venmo account instantly. But Venmo doesn't actually take money out of your bank account instantly. That actually takes some time.

FEDER: It wasn't really like I just handed an envelope of cash to a stranger - you know? - even though that's how it felt. So that night I call my bank and I tell them - look; Venmo is about to take $1,500 out of my account. I do not want to give them that $1,500. Could you block that? I've never tried this before. I've never put a stop on a bank payment. But it's really easy. They don't ask too many questions. They're just like, yeah. OK. We'll do that - costs you $30. And I'm like great. Do that, please. Thank you.

Then three days later, I get an email from Venmo saying I owe them $1,500, and they're going to freeze my account until I'm settled up. But then an hour after that, I get a second email saying actually it's all good. I don't owe them any money; account is unfrozen. And just like that, three days after it started, it was all over.

But I still didn't totally understand what had happened. I mean, one minute, I owe Venmo $1,500; the next I don't, which means either Stephen finally agreed to undo the payment, or maybe Venmo had decided to fix this for me after all. I couldn't tell which one it was. So I sent Stephen one more message. Hey, weird question, but would you possibly be interested in being interviewed for an NPR PLANET MONEY segment? And he said yes.

STEPHEN: The forcefulness of you, ma'am, is a little intimidating.

FEDER: Stephen with a P-H lives in Birmingham, Ala., and he was as surprised as I was by this whole thing.

STEPHEN: I was at work. You know, I get a notification. And I didn't know what it was. I don't know if I hit accept or hit - whatever I did, you know, then it's just there. Oh, I had no idea, you know, what was going on. I don't know if you're like some drug lord or trying to steal my money. You know? Like, I don't know what this is. I don't know if you're going to chop my leg off later to give you the cash back. I don't know.

FEDER: I thought I was being kind of polite, actually. But I like that I inspire this kind of fear.

HOROWITZ-GHAZI: I totally get where Stephen's coming from.

FEDER: (Laughter) So one thing I wanted to know from Stephen was how is it that one minute I owed $1,500, the next minute I was all squared up with Venmo. Had he done something?

So what happened at your end?

STEPHEN: After it stayed there for so long, I figured they weren't going to do anything. So I...

FEDER: Stephen says he never got in touch with Venmo, never got any of their emails. But the $1,500 did disappear from his Venmo account at one point - just vanished. It was like the whole thing had never happened. And frankly, what went down, it's a little opaque to me. Asked Venmo about it - they wouldn't tell me. What's clear is that in the end there actually was this secret undo button at my bank. And it cost me 30 bucks to use it.

HOROWITZ-GHAZI: The undo button is basically this tradeoff. With credit cards, we have an undo button - an awesome safety net for consumers. But we all pay for it, whether we know it or not. With cash, there's no fee and no undo button.

FEDER: Venmo is this new gray area. It's not really cash. It's not really a credit card. It's this new, in-between thing, and we're using it all the time and kind of still trying to figure out what it is.


HOROWITZ-GHAZI: You can email us at And we're on Facebook, Twitter and Instagram - @planetmoney. PLANET MONEY has a newsletter - short, fun essays that explain what's going on in the economy. Subscribe at That's

FEDER: Today's show was produced by Darian Woods and Rachel Cohn. This show is edited by Jacob Goldstein. Alex Goldmark is our supervising producer. Bryant Urstadt edits the show.

HOROWITZ-GHAZI: Special thanks to Christina Teatro (ph), Amy Zirkle (ph), Alan Weinberg (ph) and Scott Stone (ph).

FEDER: I'm Elah Feder.

HOROWITZ-GHAZI: And I'm Alexi Horowitz-Ghazi. This is NPR. Thanks for listening.


FEDER: Was - wait. Were you tempted on any level to just keep it?

STEPHEN: Well, yeah. I mean...

FEDER: (Laughter) OK, that's honest.

STEPHEN: It was my girlfriend. She made it...

FEDER: What?

STEPHEN: She told me to keep it. She said, just transfer it to your bank.

FEDER: Really?

STEPHEN: And I was like, well, I - yes.

FEDER: (Laughter).

STEPHEN: She was like the stars are aligned. It's yours. So I was like, no, just chill.

FEDER: I'm glad I didn't it transfer it to her.

STEPHEN: Yes, yes (laughter). Yes, count your stars.

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