PAYPAL'S 'ABUSIVE' CONDUCT [View all]

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National Law Journal

PAYPAL'S 'ABUSIVE' CONDUCT

When are a company's actions not just unfair and deceptive, but also abusive? A new case against PayPal Inc., which will pay $25 million to settle charges that the company illegally signed up consumers for unwanted credit, sheds light on a murky legal standard created by the Dodd-Frank Act.

The Consumer Financial Protection Bureau, which brought the PayPal case in Maryland federal district court, has declined to define abusive conduct — a standard that's apart from long- established consumer protection terms "unfair" and "deceptive" — through any regulation. Instead, the CFPB is laying out what it means one enforcement action at a time. For lawyers and their clients, and even members of Congress, understanding the parameters of abusive practices has been unsettling. The abusive aspect of the PayPal case "related to how [PayPal] dealt with consumers in applying payments," CFPB deputy enforcement director Jeffrey Ehrlich told reporters on a conference call. The agency "found under the facts that the company had taken unreasonable advantage of consumers' inability to protect themselves." — Jenna Greene

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