PayPal Credit facing $25M in fines for illegal signups

Paypal may be transferring millions of dollars to the U.S. government in the coming weeks.
The online payments giant is facing $10 million in penalties over accusations that it illegally signed up thousands of consumers for PayPal Credit. The company would also have to refund $15 million to customers. According to Bloomberg, PayPal plans to pay the fines.
The U.S. Consumer Financial Protection Bureau alleges that the company signed people up as users while they were trying to sign for a regular PayPal account, or while they were trying to 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,” CFPB Director Richard Cordray said.
Consumers who did sign up also faced issues, the CFPB alleges.
“PayPal failed to post payments properly, lost payment checks, and mishandled billing disputes that consumers had with merchants or the company itself,” Cordray said. “Numerous consumers reported that the company took more than a week to process payment checks.”
Along with fines, the CFPB is requiring PayPal credit to provide clear disclosures to customers about what method of payment they are using.
PayPal Credit was formerly known as Bill Me Later. The Timonium-based company was acquired by PayPal owner eBay in 2008.
A PayPal spokesman told U.S. News and World Report that they company “takes consumer protection very seriously.”
“We continually improve our products and enhance our communications to ensure a superior customer experience,” the spokesman told the publication.