Paypal faces a complaint and a proposed consent order for illegally signing up people 

The Consumer Financial Protection Bureau is filing a complaint and a proposed consent order against PayPal for illegally signing up and billing tens of thousands of consumers for its online credit product, PayPal Credit.

The Bureau alleges that PayPal lured in consumers to this product with deceptive advertising, signed up people without them knowing it, and then mishandled billing disputes when they arose. This kind of conduct has no place in the consumer financial marketplace. Under CFPB proposed order, PayPal would return the $15 million that it illegally took from consumers and it would pay a $10 million penalty for its wrongful actions.

From the first encounter a consumer may have had with PayPal Credit, there were problems. Tens of thousands of consumers who were attempting to enroll in a regular PayPal account, or make an online purchase, were signed up for the credit product without realizing it. The company enrolled other consumers while they tried to cancel or close out of the application process. Many people ended up enrolled without knowing how or why, only to discover unexpectedly that they actually had an account when they learned of a credit-report inquiry, or when they received emails welcoming them to PayPal Credit, billing statements, or debt-collection calls.

One reason so many consumers ended up having this product, unbeknownst to them, was that PayPal set the default payment method for all purchases to PayPal Credit. Other consumers were simply not able to select another payment method when they tried to pay.

Then, for those who did willingly sign up for the product, PayPal in many instances failed to honor advertised promotions, such as the promise of a $5 or $10 credit toward consumer purchases. This was deceptive advertising.

Source: CFPB – Paypal faces a complaint and a proposed consent order for illegally signing up people

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