Dive Brief:
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As eBay and PayPal work on their split, the payments company may be facing a lawsuit over its PayPal Credit, once dubbed “Bill Me Later,” according to a filing with the Securities and Exchange Commission.
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The Consumer Financial Protection Bureau may be filing a suit over the company’s lending terms and advertising as soon as June, the Wall Street Journal reports.
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The company said it may face penalties and may have to change its lending policies, but that it’s cooperating with the consumer-protection agency, according to the Wall Street Journal.
Dive Insight:
PayPal’s PayPal Credit or “Bill Me Later” service offers quick, same-day credit loans that allow shoppers to delay payments on purchases with no interest for a set amount of time. But the annualized credit terms jump to nearly 20%, retroactive to the full amount, if the balance isn’t paid off by the deadline, a practice the CFPB and consumer advocates generally frown on. PayPal says it’s discussing the matter with regulators and is cooperating, but that any major changes to its PayPal Credit policies could hurt the company.
"Resolution of these inquiries could require us to make monetary payments to certain customers, pay fines and/or change the manner in which we operate the PayPal Credit products, which could adversely affect our business," PayPal wrote in its filing.