Consumer rights attorney Hagens Berman has filed a complaint against PayPal in California. The law firm says it has evidence that PayPal subjected consumers to excess charges when purchasing from merchants that accept PayPal or Venmo.
It’s alleged that through PayPal’s merchant agreement, the company enforces high transaction fees without consumers’ knowledge. All merchants sign this agreement to accept the payment supplier.
Hagens Berman’s attorneys say the agreement is not transparent, and therefore, consumers can’t spot the price difference between PayPal, Venmo, and its competitors.
PayPal’s transactions explained
The law firm has a problem with the merchant agreement and anti-steering rules. “These rules dictate that if a retailer accepts PayPal or Venmo payments, they cannot offer any discounts or inducements to persuade consumers to use other payment options that have a lower cost (like credit cards, digital wallets, etc.). PayPal’s anti-steering rules do not allow discounts on non-PayPal transactions, and PayPal’s industry-high fees are baked into the prices consumers pay when they purchase goods online.”
It further alleges that on top of that, merchants cannot tell customers that other payment methods are more cost-effective or preferred. “Merchants are even barred from presenting different forms of payment earlier in the checkout process.”
Can I join the class-action lawsuit?
The law firm says all consumers using non-PayPal payment methods (credit cards or non-PayPal digital wallets) may have a legal leg to stand on and a right to be reimbursed.
The firm is requesting more customers to join the class action. Anyone who paid a retailer that accepts Paypal or Venmo qualifies as PayPal’s agreements bound that merchant. This means you paid an exorbitant price.
Significance of the case
The latest data shows more than 430 million people used PayPal in 2022. On average, 41 million transactions are processed per day. This year, PayPal made a revenue of $7 billion in the first quarter.
While individuals can quickly feel helpless to take action against a large corporation, a class-action lawsuit seeks to level the playing field, says Hagens Berman. “Though these measures do not bring immediate relief, they are a time-tested method of holding companies accountable for wrongdoing, including a company’s anticompetitive practices involving excessive fees.”
There is no immediate response from PayPal.
Other court cases against PayPal
PayPal is also in court for a case involving the Australian Securities and Investments Commission (ASIC). The Australian corporate regulator claims the payment service’s contracts with small businesses are unfair.
9News reports that PayPal Australia is sued in the federal court over a clause that only gives businesses two months to dispute fees or charges. It’s said that ASIC sees the term as unfair “because it allows PayPal to escape the consequences of its errors in overcharging small businesses and places additional burdens on small businesses to detect and correct charging errors.”
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Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
