Government recommends $25 million settlement for PayPal

San Jose, Calif. – PayPal may have to fork over $25 million in a proposed settlement for allegedly deceiving consumers with the PayPal Credit service, formerly known as BillMeLater. The Consumer Financial Protection Bureau wants PayPal to refund $15 million to consumers and pay an additional $10 million in fines for signing up consumers who did not want to participate, not honoring promotional offers, unfairly leading PayPal customers to use PayPal Credit, and charging consumers fees during periods of time disputes were improperly handled.



Specific allegations include automatically signing up customers who joined PayPal for PayPal Credit and automatically charging customers for purchases through PayPal Credit. The bureau suggested the settlement in a lawsuit filed in Maryland federal court.



PayPal purchased BillMeLater in 2008 and renamed it PayPal Credit in 2014. The service lets consumers delay payments for online purchases made with PayPal, similar to a credit card. PayPal has not formally commented yet.