PayPal Has To Pay $25 Million For Being Sketchy As Hell

[dlevere]

By Kate Knibbs



After the Consumer Financial Protection Bureau filed a complaint against PayPal today, the company quickly agreed to refund $15 million to customers it ripped off over the past few years.

PayPal will also pay an extra $10 million in fines to the CFPB, so the total settlement is $25 million. The CFPB accused PayPal of all sorts of schemes, so many that it kinda sounds like PayPal is run by my Grandpa Hirtz in his 1980's casino-boat drinking days rather than business professionals.

The almost impressively illegal scams that PayPal's now paying for include:

• Advertising deferred-interest promotions, but then flat-out giving customers the wrong information when they asked about them, or just never answering the customer service line
• Charging customers with the interest they were unable to defer due to receiving the wrong information and/or never being able to speak to a representative about the deferred-interest promotion
• Automatically signing people up for credit accounts without asking permission
• Setting these credit accounts as the default for purchasing, which led to people getting hit with late fees and interest fees on accounts they didn’t know existed
• Lying about $5 and $10 credit promotions and then never fulfilling them (total Grandpa move)
• Not bothering to remove late fees even after people paid them
• Taking weeks to process payments
• Not bothering to resolve customer disputes

It’s telling that the company ponied up the money within a day of the complaint.

Bloomberg via CFPB

[rimsky82]

Legal was probably like "$25 mil? Just pay it and get it over with."

[Helder]

Any better ways go get paid with less fees? I wouldn't mind ditching paypal because of their fees.

[dlevere]

I closed my PayPal account.

[Pyriel]

What sort of service are you looking for? Just a donate button, or what?

Paypal is a money transmitter, so they have to comply with all sorts of AML/KYC laws, in addition to everything else they have to do to even be moderately trustworthy. Hence the fees. If you need the same sort of service, I don't think you're likely to find anything with as a wide an array of features, or much better fees. Too many barriers to entry.

If you just need people to be able to throw money at you whenever, for whatever value you're providing, you might try Patreon. They take a pretty hefty cut, though (double-digit percentage). I'm guessing you'd be doing monthly, rather than per-project, which would create a few problems. Mainly that one-time donations are impossible, so people who just want to kick you a fiver will have to donate, wait until Patreon's payment cycle hits around the beginning of the month, and then cancel. Then there's the suspicion surrounding monthly accounts, because they get paid regardless of whether they do any work.

[MathUser]

I didn't really have any problems with paypal myself. I been paying as soon as I clicked buy it now tho. I didn't really bother with credit.