PayPal Behaving Badly?


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Friday, May 22nd, 2015

CFPB Files Complaint Alleging Unfair, Deceptive and Abusive Practices


PayPal enrolled people in its credit program, known as Pay Pal Credit (formerly Bill Me Later), without their permission,  forced customers to use PayPal Credit even when they indicated they wanted to pay another way, failed to properly process payments, refused to honor and apply promotional offers, and otherwise mistreated customers, according to a complaint filed earlier this week by the Consumer Financial Protection Bureau (CFPB).

PayPal started as a payments company in 1998, and in the early 2000s became the primary method by which Ebay sales were processed. Today, PayPal acts as a middleman for all sorts of transactions, allowing users to link their debit or credit cards, or even store money with PayPal, so that they can make or receive payments and without having to share account numbers with strangers.


Paypal Logo

PayPal credit started in 2008, but there were problems from the start according to CFPB Director Cordray:

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.

The complaint also alleges that PayPal did not properly apply payments, leading to interest charges and late fees. This was a particular problem for consumers in deferred interest programs. (Deferred interest products, we think, are traps.)  According to the CFPB, PayPal didn’t provide adequate information about how payments were applied to deferred interest balances. Moreover, consumers seeking information were told to contact customer service, but were often unable to reach an agent at all. Consumers who were able to reach an agent nevertheless found that PayPal allocated payments differently than requested. The complaint also alleges that PayPal mishandled billing disputes, including complaints about unauthorized charges, identity theft, and a failure to honor advertised promotions.

The CFPB is seeking a consent decree that will stop PayPal Credit’s alleged bad practices, require PayPal to refund $15 million to consumers, and pay a $10 million penalty. Specific changes PayPal may have to make include providing clear disclosures during the enrollment and checkout process that remind consumers that they have a choice as to how they pay, making PayPal honor advertised promotions, and requiring that PayPal process payments in a timely manner.

Do you have a PayPal story? Please share it in the comments.


6 responses to “PayPal Behaving Badly?”

  1. KayLynn Thacker says:

    DON’T USE THIS TO PAY FOR ITEMS! I ordered an item from FANJOY and paid for it via PayPal for purchase protection because the company did not have the best reviews for providing properly sized or top quality products. I paid $46.66 for a limited edition hoodie, nothing extravagant. Received the item March 27th, and the screen print on the hoodie was smeared and the hood had white spots all over it. On March 31st, I submitted a claim through the PayPal dispute center, which indicated the seller and myself had until April 20th to come to a resolution. I sent pictures to the seller twice, but they just kept asking for pictures (I do not think the representative understood English.) On April 19th, the day before the dispute was to close, I signed on to PayPal, giving the seller one last chance to make some kind of amends, and I left a message that instead of trying to rectify, the seller just keeps asking for pictures over and over again. To my surprise, PayPal closed the dispute the next day and said there is nothing they can do about it. Really???? DO NOT TRUST THIS COMPANY WITH YOUR PURCHASES, AS THEY ARE NOT PROTECTED, AND DO NOT TRUST THEM WITH YOUR CREDIT CARD INFO!

  2. Minders says:

    PayPal is the worst company ever, I was scammed by a seller and filed a case, I received an email from PayPal saying if I mailed it back I would get a refund. I sent it to Morocco (company claimed to be US, shipped from China and made me send to Morocco) After waiting nearly 2 months PayPal closed the case and said it was because the item was delivered to me, of course it was that is why I was told to SEND IT BACK. So I contact them and was told it was closed by accident, so CS opened an appeal then they closed it again because they said they couldn’t track it, this is AFTER I send 5 screen shots from different Morocco tracking sites showing item was delivered 10 days ago. Can they not read or comprehend? I do not know but what I do know is I no longer trust them with my banking information. They are completely incompetent and I am going to seek legal on this as I believe they are breaking a law, as I was promised a refund and I have all documentation proof on my side. The entire process has been a joke and I have been met with nothing but problems, stay away from them and keep yourself and your money safe!

  3. sylvia sewell says:

    paypal is bad place to sign up for they dont care to listening to what yd theou have to say they make decisons without your consent i hate paypal i have 4,360.50 in there an

  4. Tee says:

    Paypal are a SCAM. the courts consistently slap them on the wrist. If this were a bank they would be out of business. I can’t help but wonder who is in who’s pocket.

    For your information, Paypal are NOT a bank, they are NOT even FDIC insured. They are a nothing but Corporate thieves.

  5. Eldendajew says:

    Very informative article about PayPal. I just read that PayPal will shortly stop serving Turkey due to regulatory restrictions.

  6. Tracy says:

    I continue to be held hostage by this corrupt bank. Had identity theft and called bill me later to inform – next thing I know I have two – three new PayPal accounts when I thought I had one.
    Only found out when I got a call saying I was late for a payment!
    I said I sent that in and CSR said oh no that went to your other PayPal account. Told this to PayPal – Bill me later and now synchrony bank. This is out of control – on 5-1-2016 got a letter form ebay saying 4-5 attempts to get into an ebay account linked with my PayPal!!! I do not have an ebay account.
    Have paid this fraudelent account thousands of dollars to not ruin my good credit until 3 months ago while I made efforts to stop them. Then I stopped paying because late fees and charges were amounting to over 700.00. WHEN PAPER WORK ARRIVES FROM SYNCHRONY IT SAYS I BENEFITTED FROM THE CHARGES THAT WERE TO GO TO A DIFFRENT ACCOUNT. These unconsiounable charges and late fees keep accumulating and I have reached out to CFPBUREAU, BBB, PayPal and SYCNCHRONY bank and NOT one has assisted me.
    I have written to Sen. Toomey who attended a public hearing in DC recently about all these scams and have not heard from him either. I have been in business for 25 years and have a payment record that is perfect and enjoyed great credit to show and now in the course of this PayPal and Synchrony Bank fraud upon me they have dropped my credit to the low 600’s since this went on.
    How can companies such as these – still be in business and the CFPBUREAU, the FCC All take no action until hundreds upon hundreds consumers have the same problem. THE WHOLE SYSTEM, INCLUDING THE CFPBUREAU, The BBB – PROTECTS ALL OF THE FAT CAT BANKERS AND EACH OTHER AND CONTINUES ON TO SCAM THE LITTLE GUYS. THEY SHOULD HAVE HELPED ME OUT OF THIS NIGHTMARE AND SHUT THESE COMPANIES DOWN.

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