PayPal used unfair contract terms for small businesses, court finds
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The news: PayPal Australia used unfair contract terms in standard form agreements with small businesses, the Federal Court of Australia has found, following legal action brought by the corporate watchdog.
The context: Federal Court judge Mark Moshinsky found PayPal Australia's contract terms were unfair as it retained fees it had erroneously charged small businesses that failed to notify the company of the error within 60 days of the fee appearing on an account statement.
Australian Securities and Investments Commission (ASIC) announced its lawsuit against PayPal Australia in September 2023, saying the contract term allowed PayPal to escape the consequences of its own errors in overcharging small businesses.
PayPal agreed that the term was unfair and consented to court declarations outlining its breach of the ASIC Act, having voluntarily removed the term from its contracts on 8 November 2023.
The contract terms that were part of ASIC's case affected small businesses who opened a PayPal business account between 21 September 2021 and 7 November 2023.
As of 30 June 2023, there were over 600,000 small businesses with PayPal business accounts, according to ASIC.
The source: ASIC media release
