{"id":352514,"date":"2016-04-04T10:42:01","date_gmt":"2016-04-04T15:42:01","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/consumer-transactions\/paypal-square-and-the-law-understanding-online-payment-services.html"},"modified":"2024-02-26T15:14:16","modified_gmt":"2024-02-26T20:14:16","slug":"paypal-square-and-the-law-understanding-online-payment-services","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/consumer-transactions\/paypal-square-and-the-law-understanding-online-payment-services.html","title":{"rendered":"PayPal, Square, and the Law: Understanding Online Payment Services"},"content":{"rendered":"\n
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PayPal, Square, and the Law: Understanding Online Payment Services<\/h1>\n\n
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\n By Hannah Hilst<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Online payment services like PayPal and Square offer convenient options but introduce risks such as scams and account hacking. While no federal laws specifically govern these services, general consumer protection laws apply. Providers like PayPal and Square offer security measures like encryption and multi-factor authentication to protect users. It’s crucial to understand the service’s policies on data management, fees, and fraud resolution before use.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

You’ve probably already used a consumer payment service when you bought a product online. Or, you might have used an app to split the bill at a restaurant. Cash and card payments are still typical, but digital payment options are becoming more integrated into daily life.<\/p>\n

Online payment services can be convenient and easy to use. Yet, as with any online purchase<\/a> or money transfer, they can introduce risk. For example, a scammer might trick you into sending them money, or a hacker might access your account and rack up fraudulent charges.<\/p>\n

Each provider has different policies and functionality. Your choice can affect your security and legal remedies if a purchase becomes problematic. Read below to learn about popular online payment service providers and your consumer rights.<\/p>\n

E-Commerce Laws for Payment Processing<\/h2>\n

No federal laws or regulations specifically apply to online payment services. The Consumer Financial Protection Bureau proposed closer oversight of payment apps<\/a> in 2023. This rule would hold online payment services to the same legal enforcement standards as banks. Fortunately, general consumer protection laws and finance regulations cover some aspects of e-commerce business.<\/p>\n

The Electronic Fund Transfer Act<\/a> (EFTA) is one such law that applies to online stores’ point-of-sale (POS) checkout processes. It impacts your rights to resolve a digital transaction dispute. For example, the law limits how much money you might lose when a fraudster steals your payment information from a website.<\/p>\n

Credit card processing services must meet Payment Card Industry<\/a> (PCI) regulations. These companies set up precautions to protect your data when you make credit card payments.<\/p>\n

The USA PATRIOT Act<\/a> also restricts some payment services and financial institutions. This law’s goal is to reduce suspicious activity and money laundering<\/a> across the financial industry. Because of this Act, you may need to prove your identity when signing up for a payment service.<\/p>\n

Although providers must take steps to lower user risk, protecting yourself<\/a> is wise. For example, create unique usernames and strong passwords for your online shopping accounts. Check your transaction history and account balances often to detect problems like identity theft<\/a>.<\/p>\n

Popular Payment Services and Digital Wallets<\/h2>\n

You are likely to see many e-commerce platforms while browsing online. They often claim to offer more convenience and higher security for customers than direct card transactions. Mobile app payment options have even started appearing in brick-and-mortar POS systems as they have grown in popularity.<\/p>\n

As a customer, you should understand how each online payment processing service you use will do the following:<\/p>\n