The CFPB filed a complaint and proposed consent order in federal court against PayPal, Inc.  The CFPB alleges PayPal illegally signed up consumers for its online credit product, PayPal Credit, formerly known as Bill Me Later. The CFPB alleges that PayPal deceptively advertised promotional benefits that it failed to honor, signed consumers up for credit without their permission, made them use PayPal Credit instead of their preferred payment method, and then mishandled billing disputes. Under the proposed order, PayPal would pay $15 million in consumer redress and a $10 million penalty, and it would be required to improve its disclosures and procedures.

According to the CFPB, since 2008, PayPal has offered PayPal Credit to consumers across the country making purchases from thousands of online merchants, including eBay. The CFPB alleges that many consumers who were attempting to enroll in a regular PayPal account, or make an online purchase, were signed up for the credit product without realizing it. The CFPB also believes the company also failed to post payments properly, lost payment checks, and mishandled billing disputes that consumers had with merchants or the company.

According to the CFPB, PayPal’s actions were abusive acts or practices in violation of the Consumer Financial Protection Act of 2010, 12 U.S.C. § 5531(d)(2)(B).

PayPal did not admit or deny the CFPB’s allegations.