PayPal Pays For Illegal Enrollments in PayPal Credit
Have you ever used PayPal? You may be eligible for a refund.
The electronic payment company PayPal, will pay $25 million to settle a lawsuit with the Consumer Financial Protection Bureau (CFPB). According to the suit, CFPB accused PayPal of illegally signing customers up for PayPal Credit, formerly known as Bill Me Later, without their permission. Many customers did not realize they were enrolled in the program until they were charged interest and late fees.
PayPal, who neither admits nor denies fault, has agreed in a consent order to pay $15 million in refunds to customers and a $10 million penalty to CFPB.
Alleged Illegal Practices
In addition to illegally enrolling clients in PayPal Credit, the company is also accused of:
- Failing to honor advertised promotions,
- Charging unfair deferred interest fees,
- Posting payments late,
- Charging late fee and interest even when website outages made it impossible for customers to make timely payments, and
- Mishandling customer disputes.
Other Orders
In addition to paying $25 million in refunds and fines, PayPal must also:
- Clearly provide customers with payment options in addition to PayPal Credit. PayPal cannot process payments through PayPal Credit unless the customer affirmatively selected that payment option.
- Clearly explain the benefits of PayPal Credit. The company cannot misrepresent the terms and conditions of any promotional offers.
- Post payments in a timely manner. PayPal must post payments to accounts on the day received. The company also cannot charge late fees or interest if a payment is late by up to five days due to a website outage.
- Resolve billing disputes in a timely manner. PayPal must accept billing disputes in writing or through telephone or the internet. The disputes must be resolved and any refunds issued within two billing cycles
Refunds
The company has not announced any procedures on how they will identify eligible customers and issue any refunds yet. The announced consent order is currently only a proposed order. It must first be approved by a judge before PayPal must make refund payments.
If you believe that you have been charged fees and interests due to unfair or illegal practices by PayPal or any other credit company, consult with an experienced consumer protection attorney for help.
Related Resources:
- Browse Consumer Protection Lawyers by Location (FindLaw's Lawyer Directory)
- PayPal to pay $25M in refunds and penalties (USA Today)
- College Student Credit Cards: 5 Tips to Avoid Debt (FindLaw's Law and Daily Life)
- Legal How-To: Getting a Credit Card 'Chargeback' (FindLaw's Law and Daily Life)