PayPal Settles Customer Service Complaints

September 29, 2006

Online payment company PayPal has settled a consumer complaint with the attorneys general of 28 states. The states had brought action against the eBay subsidiary because of some of its customer service policies.

The company said it will shorten and streamline its user agreement and provide more information about its protection programs. The company will pay $5.2 million to customers and to the states to cover their investigation costs.

The state officials said they received a number of complaints from consumers using PayPal. Many consumers said their accounts had been frozen without notice. Some said their bank accounts were debited by PayPal when they expected their credit cards to be charged, and some said they never received refunds for items they had purchased online but never received.

"The consumer has rights, and PayPal must explain those rights," said Maryland Attorney General Joseph Curran.

"Under this agreement, consumers will no longer have to click through multiple hyperlinks to get critical information about their financial transactions," said Washington Attorney General Rob McKenna.

PayPal is the largest company providing payment services for consumers making online purchases. It was acquired by online auction site eBay in 2002.