ATTORNEY GENERAL CURRAN ANNOUNCES
AGREEMENT WITH PAYPAL

Maryland Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division and the offices of 27 other Attorneys General have entered into an agreement with PayPal, Inc. under which PayPal will implement new business procedures in relation to services consumers receive.

PayPal provides an Internet payment system to transfer money to other people or businesses. PayPal is commonly used for internet auction purchases or purchases from online businesses. The Attorneys General received complaints from PayPal users whose accounts had been frozen without advance notice, whose bank accounts were debited by PayPal when they had understood their credit cards would be charged, and whose accounts were not refunded by PayPal when they failed to receive the item that they had purchased online.

“ The consumer has rights, and PayPal must explain those rights,” said Curran. According to the agreement PayPal must better explain the terms of their service and apprise the consumer of their various payment options. Generally consumers have more rights when they use credit cards to make online purchases. If the consumer does not receive the goods that were purchased, the consumer can contact the credit card company and have the credit card company “chargeback” the purchase.

Today’s settlement requires PayPal to inform consumers of important terms and conditions before a consumer becomes a PayPal member and at the times members initiate transactions. The agreement also requires the company to make that information more accessible to users. Paypal is also required to give members a clear choice regarding what form of payment to use when making a purchase. Consumers typically fund their payments through the system by credit card, debit card or electronic funds transfer from a bank account. PayPal agreed to provide explanations of the differences between its in-house PayPal dispute resolution programs and chargeback rights granted by federal law to consumers who use electronic banking, debit cards and credit cards to make payments and purchases.

In addition to changing its practices, PayPal agreed to pay $1.7 million to the states, of which Maryland will receive $59,500. The group, which was led by the Illinois Attorney General’s Office, also included Alabama, Arizona, California, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Vermont, Washington, and West Virginia.