Subscribe Now

* You will receive the latest news and updates on the Canadian IT marketplace.

Trending News

Blog Post

PayPal to pay up
SMB

PayPal to pay up 

According to an announcement from the Bureau, PayPal has been ordered to pay a total of $25 million in fines and refunds to its clients after allegedly signing them up for their PayPal Credit service without their consent.

Launched in 2008 as Bill Me Later, PayPal Credit operates as a line of credit that can be used by customers to pay for purchases made both online and off. PayPal used deceptive methods to advertise the service, and later registered all of their users for it illegally. Once registered, PayPal users were redirected to PayPal Credit instead of their standard accounts when they logged in to make purchases or send money transfers. The company also mishandled billing for the service.

“The CFPB’s action should send a signal that consumers are protected, whether they are opening their wallets or clicking online to make a purchase,” said Richard Cordray, director of the CFPB in a statement.

The settlement proposed by the CFPB will force PayPal to reimburse their customers to the tune of $15 million, along with a civil penalty of $10 million.

“PayPal Credit takes consumer protection very seriously. We continually improve our products and enhance our communications to ensure a superior customer experience,” a PayPal spokesperson said in a statement. “Our focus is on ease of use, clarity and providing high-quality products that are useful to consumers and are in compliance with applicable laws.”

Information from a source close to PayPal indicates that the government investigation into the matter was launched after receiving what was described as a “very small amount” of customer complaints from approximately 0.01 per cent of PayPal Credit users.

The announcement comes in the midst of a delicate time for the digital payment processor. Last year, eBay, PayPal’s parent company, made the decision to part ways with PayPal so that the company could begin the transition to going public. This move is expected to cause some separation for both companies and those invested in them.

If the CFPB’s settlement gains the approval of a judge, PayPal will have to submit written plan within two months. The plan would identify the affected customers, the total amount of money to be paid out to them, and how it plans to make the payments.

Under the terms proposed by the settlement, those eligible for these payments include individuals specifically identified by PayPal and the CFPB who were forced to pay late fees, interest or incurred deferred-interest charges.

The eligible parties also include those who had payments processed via PayPal Credit without any prior knowledge of the fact that they were using PayPal Credit.

Related posts