Paypal fined $25M over online credit program

Getty Images

Paypal is paying $25 million to settle allegations it illegally enrolled customers in its credit payment plans. 

The Consumer Financial Protection Bureau leveled a host of charges in a consent order Tuesday, also alleging PayPal automatically set the credit option as customers’ default payment preference, that it deceptively advertised credit promotions and mishandled billing disputes. 

{mosads}A total of $15 million will be set aside to reimburse consumers. The other $10 million will go to the agency. The company will also have to make sure future customers know they are signing up for the credit program. 

“PayPal illegally signed up consumers for its online credit product without their permission and failed to address disputes when they complained,” CFPB Director Richard Cordray said in a statement. “Online shopping has become a way of life for many Americans and it’s important that they are treated fairly.”

The order applies to customers from 2011 all the way up to the beginning of May 2015.

The California-based company offers people an easy way to make secure purchases online. The company was acquired by eBay in 2002, but last year, the companies announced plans to part.

In 2008, Paypal acquired a company called Bill Me Later — a service that has since been renamed Paypal Credit. The program operates much like a credit card, allowing people to make purchases and pay the balance down later, subject to interest rates. 

But the agency alleges the company deceptively enrolled customers in the credit program who were only attempting to sign up for a standard Paypal account, among other allegations. 

“The Bureau brings this suit to secure relief for injured consumers, to stop Defendants’ unlawful conduct, and to obtain a penalty against them,” the agency wrote in a complaint. 

The settlement was submitted in a U.S. court in Maryland and will need to be approved by a judge before taking effect. The agency noted that the order “is not a finding or ruling that the company has actually violated the law.”

A spokesperson for the company did not specifically address the allegations in a statement. 

“PayPal Credit takes consumer protection very seriously,” according to the company. “We continually improve our products and enhance our communications to ensure a superior customer experience. 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. ”

Tags Consumer Financial Protection Bureau PayPal

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

See all Hill.TV See all Video

Most Popular

Load more


See all Video