Tags: paypal | 25 million | payout | payback | credit | scam

PayPal's $25 Million Payout Is Payback for Credit Scam

By    |   Wednesday, 20 May 2015 06:58 AM

PayPal will pay $25 million in restitution and fines to settle a complaint brought by the Consumer Financial Protection Bureau alleging that it illegally signed up tens of thousands of customers for its PayPal Credit service, formerly known as Bill Me Later.

"Many of these consumers learned of their PayPal Credit accounts for the first time when they received billing statements with accrued late fees and interest charges, or when they received debt-collection calls," says part of the complaint filed by the bureau on Tuesday, reported technology news site The Verge.

$15 million of the $25 million settlement will go directly to customers, while $10 in fines will be paid to the bureau.

In the complaint, CFPB said that PayPal used deferred-interest promotions to entice customers, and in many cases made PayPal Credit the default payment system for transactions — signing them up as they made a regular transaction through the PayPal system. In many cases, cutomers who signed up for PayPal Credit never received a promised sign-up bonus of $5 or $10. Elsewhere, the company was accused of not removing late fees after people paid them because of website issues, and waiting weeks to process payments.

"Many people ended up enrolled without knowing how or why, only to discover unexpectedly they actually had an account," said CFPB Director Richard Cordray, according to Bloomberg News. "This kind of conduct has no place in the consumer financial marketplace." 

PayPal did not confirm nor deny any wrongdoing in the settlement, but did agree to it within a day of the CFPB complaint.

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PayPal will pay $25 million in restitution and fines to settle a complaint brought by the Consumer Financial Protection Bureau alleging that it illegally signed up tens of thousands of customers for its PayPal Credit service, formerly known as Bill Me Later.
paypal, 25 million, payout, payback, credit, scam
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2015-58-20
Wednesday, 20 May 2015 06:58 AM
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