Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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AG MYERS FILES AGREEMENT WITH PAYPAL OVER CONCERNS WITH BUSINESS PRACTICES

September 28, 2006

Attorney General Hardy Myers today filed an agreement with PayPal, Inc. along with 27 other Attorneys General resolving concerns about the company's business practices. The company, a wholly-owned subsidiary of eBay, Inc. with its principal place of business in San Jose, California, is named in an Assurance of Voluntary Compliance filed in Marion County Circuit Court. The AVC admits no law violation.

PayPal is an online, low-cost payments alternative for Internet sellers and has "historically operated as a substitute for checks or money orders being sent through the mail." The most common reasons for sending the money include auction or on-line business purchases but transferring money between individuals also is supported by the PayPal system. PayPal charges fees to some users depending on the type of user account.

"Oregon has received 58 written complaints against PayPal over the last six years, which compared to some states is a relatively low number but many of the misleading business practices alleged are the same ones complained about by our citizens," Myers explained.

Complaint patterns from the 28 states included the company freezing money held in consumer PayPal accounts during disputes with the company and charging consumers' bank accounts when the consumers expected charges would be put on their credit cards.

Consumers also complained to the Attorneys General that, although PayPal contracts gave members some protection when using their credit cards, they believed PayPal was offering exactly the same protections they would get with the use of a credit card.

Today's settlement ensures that PayPal clearly and conspicuously discloses important terms and conditions before a consumer becomes a PayPal member and at the times members initiate transactions. As part of making certain that the terms and conditions are clear to consumers, the agreement also requires the company make that information more accessible to users by requiring changes to the way the company uses hyperlinks and multi-page documents.

The agreement also requires that, whenever a PayPal member gets ready to make a purchase he or she will be presented with a clear choice regarding what form of payment to use. The usual forms consumers use to fund their payments through the system are by credit card, debit card or electronic funds transfer from a bank account.  The agreement also requires that PayPal provide clear access to webpages containing important 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.

PayPal will pay $1.7 million dollars to 17 investigative states with Illinois as the lead. Oregon did not participate in the investigation but joined the multi-state with 10 other states in order to insure Oregonians receive the future consumer protections provided by the agreement.

Consumers wanting information on consumer protection in Oregon may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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