The online payment service PayPal has agreed to pay $25 million of fines and compensation after being accused of deceiving its customers
A government watchdog claims the Ebay owned company PayPal is deceiving customers by adding new members to a credit-card-like scheme without making them aware of the fact. It also stated that PayPal has mishandled bill disputes, among other offenses including a delayed payment scheme default option called PayPal Credit, which allows users to spread out bills over several months, paying a monthly interest rate for the privilege. Members face additional fees if any of their payments are overdue. A statement released by Paypal says,
PayPal Credit takes consumer protection very seriously. 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.”
PayPal has offered to settle the case without admitting to any wrongdoing on their part, however a judge needs to approve the agreement for it to become legally binding. PayPal is accused of making the service the default option for new sign-ups without making clear that it was doing so. Richard Cordray, director of the US Consumer Financial Protection Bureau, in a recent statement said,
Tens of thousands of consumers who were attempting to enroll in a regular PayPal account or make an online purchase were signed up for the credit product without realizing it. PayPal also failed to post payments properly, lost payment checks and mishandled billing disputes that consumers had with merchants or the company itself.”
This is the second time PayPal has been penalized by the United States government in recent months and it agreed to pay $7.7m to the U.S. Treasury following claims the company had allowed payments that violated sanctions against Iran, Cuba and Sudan.
-Infinite Wiz (@InfiniteWiz)