Editor’s Note: This story has been updated with a statement from a PayPal spokesperson.
In a recent development, the federal court of Australia has ruled that the local unit of PayPal Holdings Inc. (NASDAQ:PYPL) had an unfair term in its contracts with small businesses, leading to instances of overcharging.
What Happened: The Australian Securities & Investments Commission (ASIC) announced that the court deemed PayPal’s term unfair, Reuters reported on Friday. This particular term required customers who failed to report overcharging errors within a 60-day period to accept the charges as accurate.
The court proceedings against PayPal were initiated by ASIC in September of the previous year. ASIC Deputy Chair Sarah Court stated, “Today’s decision serves as a reminder to all businesses that unfair contract terms contained within standard form contracts with small businesses will not be tolerated.”
“PayPal Australia takes our responsibility to our customers very seriously and we have been working in full cooperation with ASIC on this matter,” a PayPal spokesperson told Benzinga.
Why It Matters: The ASIC disclosed that PayPal cooperated voluntarily during the investigation. The company acknowledged that the term was unfair, agreed to the court’s declarations, and voluntarily removed the term from its contracts on Nov. 8, 2023. The court has also ordered PayPal to pay ASIC’s litigation costs.
This ruling comes at a time when PayPal is undergoing a transition phase. The company’s new leadership and strategy are expected to drive long-term profitable growth. The company’s stock closed at 59.51 USD on July 5, 2024, down 0.22% from the previous close.
Price Action: On Wednesday, Paypal closed at $59.64 and was trading 0.23% lower at $59.50 during Friday’s pre-market, according to Benzinga Pro.
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Photo: Lets Design Studio/Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
