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PayPal forced to apologise for dodgy small print

Fined $150,000

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Payment provider PayPal has had its wrists slapped for misleading customers with dodgy small print.

The e-Bay subsidiary will pay $150,000 to New York State as punishment and to pay for the states' investigation.

The controversy centres on what happens when customers buy goods which fail to arrive. If such a purchase was made using a credit card, the amount would be charged back to the customer's account.

PayPal's 'User Agreement' promised customers "the rights and privileges expected of a credit card transaction". But some customers were denied such rights, Attorney General Eliot Spitzer said.

"Protecting consumers' rights in online transactions is the best way to establish and maintain confidence in electronic commerce. As with any new industry, it is essential that consumers making e-payments receive full disclosure of their rights and liabilities."

PayPal has agreed to clarify its terms and conditions. The company has 25m account holders.

Clickhere for the press release. ®

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