Online payments giant PayPal has paid $US25 million in order to settle claims of illegal conduct made by the U.S. Consumer Financial Protection Bureau (CFPB).
On the same day that CFPB filed a complaint and proposed consent order in federal court, alleging, among other things, that the company had deceptively advertised benefits and had engaged in illegal billing practices, PayPal has decided to refund $15 million to consumers unjustly charged and pay $10 million in penalties.
“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 CFPB’s action should send a signal that consumers are protected whether they are opening their wallets or clicking online to make a purchase.”
The CFPB made the following six allegations against PayPal:
- Deceptively advertised promotional benefits.
- Abusively charged consumers deferred interest.
- Enrolled consumers in PayPal Credit without their knowledge or consent.
- Made consumers use PayPal Credit for purchases instead of their preferred payment method.
- Engaged in illegal billing practices.
- Mishandled consumer disputes about payments.
According to a Bloomberg report, a PayPal spokesperson said the company “takes consumer protection very seriously.”
“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.”