Update: PayPal has agreed to pay $25 million in fines and compensation to settle the case, without admitting wrongdoing.
Of course, a judge’s approval is required to get PayPal to cough up the dough and the company has neither admitted nor denied the allegations as yet.
The bureau said some customers who tried to register a standard PayPal account were enrolled in the credit product without realizing it and that a number of users discovered this only after receiving billing statements or debt collection calls.
I tried creating a fresh US PayPal account and was prompted to sign up for PayPal Credit by providing a billing address, as well as my date of birth and social security number.
While it’s true that PayPal has integrated this registration process into its traditional sign-up form, the page explicitly states that the product is a credit line and allows you to skip it with a click. The complaint states that some users “ended up enrolled in PayPal Credit without knowing how or why.”
The CFPB might have a stronger case in its further allegations, in which it states that PayPal Credit failed to honor some promotions it advertised, and charged late fees in some cases when website problems prevented consumers from paying off their debts.
We’ve contacted PayPal and the CFPB to find out more and will update this post when we hear back.