PayPal penalised for 'deceptive' practices

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PayPal penalised for 'deceptive' practices

Post by Admin on Thu May 21, 2015 10:24 am

The online payment service PayPal has agreed to pay $25m (£16.1m) of fines and compensation in the US after being accused of deceiving its customers.

A government watchdog denounced the company for adding new members to a credit-card-like scheme without making them aware of the fact.

It also said PayPal had mishandled bill disputes, among other offences.

The eBay-owned company has offered to settle the case, without admitting wrongdoing.

A judge needs to approve the agreement for it to become legally binding.
Default option

PayPal Credit is a delayed payment scheme, 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.

PayPal is accused of making the service the default option for new sign-ups without making clear that it was doing so.

"Tens of thousands of consumers who were attempting to enrol in a regular PayPal account or make an online purchase were signed up for the credit product without realising it," said Richard Cordray, director of the US Consumer Financial Protection Bureau.


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