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PayPal Confirms Ongoing Investigation By FTC Over Venmo, 'May Result In Substantial Costs'

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Paypal Holdings Inc PYPL 1.97% announced in a regulatory filing that the Federal Trade Commission is actively investigating the company to determine if it is engaged in any deceptive or unfair practices.

Paypal noted it received a Civil Investigative Demand (CID) from the FTC on March 28, 2016. The investigation seeks to determine if the company has been or is currently engaged in any activities that are in violation of the Federal Trade Commission Act.

The investigation is focusing on Paypal's Venmo service.

Paypal added the CID requests the production of documents and answers to written questions related to Venmo. The company stated it is actively cooperating with the FTC but cautioned that an unfavorable outcome could "lead to an enforcement action" and/or a one or more consent orders which may "result in substantial costs." In addition, an unfavorable outcome could also require Paypal to change aspects of the manner in which it operates the segment.

Shares of Paypal were trading higher by more than 1 percent early Friday morning.

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