This Monday, PayPal, Inc. (“PayPal”) apologized to its customers and overhauled controversial telemarketing consent language in its recently revised User Agreement. PayPal’s decision follows a pair of sharply worded letters delivered to the company three weeks ago by the New York Attorney General’s Office (“NYAG”) and Federal Communications Commission (“FCC”), which questioned PayPal’s telemarketing practices and demanded compliance with the Telephone Consumer Protection Act (“TCPA”).

How did PayPal change its User Agreement to address regulators’ concerns?

Regulators Take Aim at PayPal’s Telemarketing Consent Language

As this blog previously reported, the NYAG delivered letters to PayPal and eBay, Inc. on June 9, 2015. The correspondence expressed concerns with certain telemarketing consent provisions in the companies’ revised User Agreements that purported to allow PayPal, eBay and their respective affiliates and service providers to contact customers at telephone numbers that the companies might “have otherwise obtained” using “autodialed or prerecorded calls and text messages.”

Just two days later, the FCC mailed a letter of its own to PayPal, which strongly advised the online money transfer and e-commerce company to re-evaluate its telemarketing compliance practices and to “operate in the manner prescribed by the TCPA.”

PayPal Makes Further Revisions to User Agreement

This Monday, after feeling the heat from the FCC and NYAG, PayPal announced further revisions to its User Agreement. According to PayPal, the latest changes are meant to clarify that that the company primarily uses autodialed or prerecorded calls and text messaging for non-marketing purposes.

The newly revised User Agreement will also make clear that:

  • PayPal will not use autodialed or prerecorded calls or texts to contact its customers for marketing purposes without prior express written consent; and
  • Customers can use PayPal’s products and services without consenting to receive autodialed or prerecorded calls or texts, and may revoke such telemarketing consent.

In a statement, FCC Enforcement Bureau Chief Travis LeBlanc called PayPal’s revisions “significant and welcome improvements,” commending PayPal “for taking steps to honor consumer choices to be free from unwanted calls and texts.” Likewise, New York Attorney General Eric T. Schneiderman complimented PayPal “for doing the right thing and ensuring consumers’ rights are protected.”

Don’t Take Shortcuts with the TCPA

Fortunately for PayPal, the company may have avoided further regulatory enforcement – and substantial liability – by rethinking the unusual telemarketing consent language contained in its User Agreement. Other businesses that choose to play fast and loose with the TCPA and other applicable telemarketing regulations may not be so lucky.