The company faces nearly $25 million in fines after breaking law.
PayPal is facing a $25 million dollar fine, $15 million of which will go to users, thanks to a recent lawsuit with the Consumer Financial Protection Bureau. The report called upon PayPal saying that it broke several different laws through the unlawful enrollment of PayPal users in credit card services, according to TechCrunch. These counts include:
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- Enrolling consumers in PayPal Credit without their consent or authorization;
- Customers that attempted to use other payment methods instead had their transactions funneled to PayPal Credit;
- Failure to accept, process, or post payments made to PayPal Credit resulting in late fees and finance charges;
- False advertising;
- Not providing information about the way in which payments were allocated between standard balances and balances at a promotional rate;
- Unfair billing dispute practices.
All of these offenses attracted the attention of the government, and now PayPal is going to have to pay up.
Basically what PayPal did was sign people up for their credit card without asking. In some cases, if they did ask and the user said "No," they were still signed up. Then, they were secretly charging late fees and overdrafts to the user, but hiding it away in such a way that they didn't see it. They also weren't honoring some of the specials they were running, like $10 off your first purchase or no APR.
The PayPal CEO responded to the claims:
“We’re coming into the market at a time when the financial services industry is going through some fundamental shifts,” new PayPal CEO Dan Schulman said at PayPal’s Commerce: Rewind event. “We’re really thinking how do we re-imagine PayPal almost as a service. PayPal as a SaaS platform.”
If you think you may have been impacted by the PayPal breach, sit tight by your computer. The company should be sending out emails to its users within the next few weeks.