They discovered their accounts only after finding a credit-report inquiry or receiving welcome emails, billing statements, or debt-collection calls for amounts past due, including late fees and interest. Many consumers ended up enrolled in PayPal Credit without knowing how or why they were enrolled. The company enrolled other consumers while they tried canceling or closing out of the application process. Enrolled consumers in PayPal Credit without their knowledge or consent: The CFPB alleges that the company often automatically enrolled consumers in PayPal Credit when those consumers were signing up for a regular PayPal account or making purchases.Many such consumers were hit with deferred-interest fees that, due to the company’s conduct, they could not avoid. But consumers who attempted to contact the company to get more information or request to apply their payments to promotional balances often could not get through to the company’s customer service line or were given inaccurate information. Abusively charged consumers deferred interest: The CFPB alleges that PayPal offered consumers limited-time, deferred-interest promotions, and that PayPal purported to let consumers pick how payments would be applied to these promotional balances.Deceptively advertised promotional benefits: The CFPB alleges that PayPal failed to honor advertised promotions, such as a $5 or $10 promised credit toward consumer purchases.Specifically, the CFPB alleges that the company: Tens of thousands of consumers experienced these issues. The company also failed to post payments properly, lost payment checks, and mishandled billing disputes that consumers had with merchants or the company. The CFPB alleges that many consumers who were attempting to enroll in a regular PayPal account, or make an online purchase, were signed up for a credit product without realizing it. Since 2008, PayPal has offered PayPal Credit to consumers across the country making purchases from thousands of online merchants, including eBay. Consumers often enroll in PayPal Credit while purchasing a good or service online or while creating a PayPal account. As with credit cards and other forms of credit, consumers using PayPal Credit may incur interest, late fees, and other charges. PayPal Credit operates like other forms of credit consumers make purchases using it as a form of payment and then repay the debt over time. PayPal Inc., a California-based company, offers a line of credit known as PayPal Credit that consumers can use to pay for online and other purchases. The CFPB’s action should send a signal that consumers are protected whether they are opening their wallets or clicking online to make a purchase.” “Online shopping has become a way of life for many Americans and it’s important that they are treated fairly. “PayPal illegally signed up consumers for its online credit product without their permission and failed to address disputes when they complained,” said CFPB Director Richard Cordray. Under the proposed order, PayPal would pay $15 million in consumer redress and a $10 million penalty, and it would be required to improve its disclosures and procedures. The CFPB alleges that PayPal deceptively advertised promotional benefits that it failed to honor, signed consumers up for credit without their permission, made them use PayPal Credit instead of their preferred payment method, and then mishandled billing disputes. ![]() for illegally signing up consumers for its online credit product, PayPal Credit, formerly known as Bill Me Later. ![]() Today the Consumer Financial Protection Bureau (CFPB) filed a complaint and proposed consent order in federal court against PayPal, Inc. PayPal to Refund $15 Million to Consumers and Pay $10 Million Fine
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