PayPal Enters into Consent Order with CFPB (May 19, 2015)
PayPal, reportedly, has agreed to a consent order with the CFPB that would require the company to refund $15 million to consumers who were affected by alleged practices that included, among others, enrollment without authorization and deceptive advertising for its PayPal Credit program, previously known as BillMeLater.
PayPal, which neither admits nor denies the allegations, also is subject to a $10 million penalty, payable to the CFPB. The company has made numerous statements confirming its commitment to consumer protection and regulatory and legal compliance.
The consent order must be approved by a Maryland federal judge.
Although the CFPB’s allegations involve a credit product (consumers could make an online purchase and repay over time, with interest), the implication is clear—providers of consumer payment products must exert extreme diligence to ensure that signing up for services is explicit and clear, and practices supporting those services must be fully vetted for compliance. It also highlights the importance of due diligence to ensure that all aspects of a possible acquisition’s procedures and practices are fully examined.