PayPal targeted by ASIC for contract clause letting it keep wrong fees
The corporate regulator alleges a contract clause that allows PayPal to keep any fees wrongfully charged to customers if the payments provider’s errors are not identified within two months is unfair.
The Australian Securities and Investments Commission sued PayPal in the Federal Court on Thursday, arguing the offending clauses – which appear in more than 600,000 PayPal contracts with Australian businesses – should be considered “unfair” under the ASIC Act and made void by the court.
ASIC deputy chairman Sarah Court said the claim had been filed “to protect the interests of small businesses”. Gabby Jones
Under a heading titled “Your responsibility to notify PayPal of pricing or fee errors”, the contracts stipulate that “you [the customer] will have 60 days to notify PayPal in writing of any errors or discrepancies with respect to the pricing or other fees applied by PayPal”.
The clause then adds: “If you do not notify PayPal within such timeframe, you accept such information as accurate, and PayPal shall have no obligation to make any corrections.”
ASIC deputy chairman Sarah Court said the claim had been filed “to protect the interests of small businesses”.
“We allege this term is unfair because it allows PayPal to escape the consequences of its own errors in overcharging small businesses, and places additional burdens on small businesses to detect and correct charging errors,” she said.
A PayPal Australia spokesperson: “We have been working in full cooperation with ASIC and take this matter very seriously. It would not be appropriate to comment in detail on proceedings before the court; however, we are carefully reviewing the claims.”
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