Posted 05/20/2015 at 8:40 AM
Posted 2 years ago
The latest credit service offered up by PayPal has placed them in the federal doghouse over illegal methods in obtaining customers.
The Consumer Financial Protection Bureau issued an announcement Tuesday that divulged that PayPal illegally signed up customers for their PayPal Credit service without expressed permission.
The service, formerly referred to as BillMeLater, is essentially a line of credit given to users as a form of payment which they can pay back at a later time.
In that span, the debt is subject to interest and late fees. The service has been an option for all customers since 2008 including those making purchases on their parent company, eBay.
Besides signing up customers without consent, PayPal was also found liable for making the service the default method of payment without permission and ignored complaints.
They also were found guilty of losing payments and deceptive advertising.
The CFPB has ordered that PayPal pay customers affected by these issues $15 million, and to pay an additional civil penalty totaling $10 million.
PayPal is also required to make changes to improve their notices regarding the service and to fully detail how PayPal Credit works for customers going forward.