The PayPal users are aware of the fact that when they have to buy something through PayPal they have to go out of the way to avoid the option of Bill Me Later. It is a credit option by the company that allows users to pay afterward.
This appears to be a good thing, but the Consumer Financial Protection Bureau or CFPB has something else to say. In a complaint filed with the Bureau, PayPal has to face serious allegation for its service option: Bill Me Later.
The report says that the company has used the “Bill Me Later” service for malicious activities. The service was activated for the user without their knowledge or permission. It gave false/deceptive benefits of the service in the advertisements that didn’t help the customers. The complaint also says that the company ‘mishandled’ the billing in such a way that turned into late fees and cost extra charges in terms of interest.
It also forced people to use the service instead of other options. All these efforts were directed to apply late fee charges and interest on the payment used through bill me later option. All these allegations if proved true would be detrimental to the company and significant setback for its reputation as an online transaction company.
The report has cited the examples of many customers who did not know that they have signed up for the notorious program. They came to know that they were its members when they got billing statements with piled up late fees and interest charges. Similarly, some consumers found out they were the notorious program ‘members’ when they received calls from the company for the fee and debt collection, the complaint report further added.
The CFPB has asked the company to pay $ 15 million for reimbursements to the affected customers; who enrolled for the option without knowledge and bought something with this service, and the clients who were affected by the questionable customer care service and communication.
The $10 million will go to the CFPB Civil Penalty Fund. This fund is used to compensate the customers where the companies can’t pay the affected. The bureau has also asked PayPal to make its conditions clear on when the people will be enrolled in for this service or for charging fees and interest. Paypal has agreed to take the required measures. On the other hand, it didn’t concede to the charges made by the Bureau.
The company denied any malpractices. The spokesperson of the company said that we continuously improve our services and communication. We on one hand provide accessible, high-quality products and services which are by the laws. Although, the company has conceded to take the prescribed steps pointed out by CFPB but it denied all allegations.
The Bureau showed a lenient attitude towards the company. In its previous instances, it fined heavily, e.g., The Bank of America has to pay enormous sum of $727 million and another company had to pay $309 million. By this comparison, PayPal has been slightly warned. But the negative publicity caused by the case would haunt the company’s finances and reputation for a long time.