The Consumer Financial Protection Bureau (CFPB), a federal consumer watchdog agency with regulatory power, has ordered the payment processing company PayPal to pay $15 million in refunds and $10 million in fines. According to Ray Lane of the CFPB, PayPal violated law when it signed up customers for its “Bill Me Later” credit program (hp.com).
The CFPB claims the company used deceptive practices to lure customers into signing up for credit and even signed up some without their consent. When new customers signed up for PayPal accounts, many found themselves unwittingly enrolled in the credit program. In addition, the CFPB insists that credit payments were not posted promptly and numerous billing disputes were mismanaged. In addition to paying $25 million in combined fines and refunds, PayPal has also been ordered to improve its disclosures. In the future, the company will have to be more explicit about its credit offers.
The California-based company rolled out its PayPal credit program in 2008. Those who used “Bill Me Later” after that date and who are subject to a refund will be contacted by the company in the near future.