PayPal Fined $25 Million For Credit Program
Gareth Andrews / 5 years ago
Who remembers the “bill me later” option for Paypal? Not many I’m willing to bet, it didn’t last too long, and now we know why. It’s going to cost PayPal $25 million in fines after it was found to have signed people up to the scheme under false advertisements and sometimes without their permission or knowledge.
The bill me later option was created as a credit system, that means that when you bought something under it, a credit service would pay for your purchase and then the user would pay them back. However, PayPal is said to have signed up people to the service without their permission or knowledge (some people were using the feature without even knowing they had accounts) and even sometimes forced users to select PayPal credit instead of using the normal credit or debit card billing methods.
PayPal is even accused of incurring late fees and interest charges by mishandling people’s bills and accounts. Under the complaint filed by the Consumer Financial Protection Bureau (CFPB) some users weren’t aware of the accounts until they received statements stating late fees and interest charges, or in more severe cases calls from debt collection companies.
PayPal is now required to pay out $15m in reimbursements to consumers who were placed into the scheme or made purchases through it. A further $10m fine is to be paid to the CFPB Civil Penalty Fund, a fund set up to help pay out to victims when a company is unable to.
I was unfortunate to find this situation myself, after buying an item on eBay and being forced to select PayPal Credit (a scheme which at the time I didn’t even know existed) and then setting a date of a week later for the date of repayment. I did manage to find the pay early option through on the PayPal account page, after several minutes of searching through settings and records and was able to settle the payment within a matter of minutes. Looks like I was a lucky one.
Did you encounter the “bill me later” option? What is your experience with the option? Were you aware you were using a credit program that could bill you extra for payments missed?
Image courtesy of WikiMedia.