Telling a friend you’re paying him back for “ISIS beer funds!!!” is not a particularly good joke. I knew this as I was typing it at 2am on a Sunday, but what I did not know is that it’s an even worse joke on Venmo because the federal government will detain your $42.

Almost immediately after I hit send, Venmo—you know, the app that allows people to send money to each other via their phones—blasted an e-mail into my inbox. The company wanted to “better understand a recent payment,” specifically:...

Stuck between explaining a dumb memo line or trying to minimize the reference to a brutal terrorist organization, I tried to play it off as a misunderstanding....

Venmo wasn’t buying it. “Unfortunately,” wrote someone who signed the e-mail as Heather, “due to OFAC regulations, we are not allowed to give the funds back to you or issue a refund.”