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PayPal fined $150,000 - Repayment policy investigated

ALBANY, New York (AP) -- The nation's largest online payment service, PayPal, is paying New York $150,000 in penalties after misrepresenting to consumers its policy on repayment when merchandise doesn't arrive, the state attorney general said Monday.

PayPal, which claims 40 million customers worldwide, had specifically stated that it provided the same rights and protections of a traditional credit card transaction, said Attorney General Eliot Spitzer. But consumers were often denied those rights, he said.

For example, consumers who didn't receive merchandise purchased through PayPal were often denied reimbursement from either PayPal or American Express or Discover credit cards. A spokeswoman for Spitzer said consumers complained they were being bounced between PayPal and their credit card companies and there was no prompt action.

The credit card firms agreed to properly credit consumers in an agreement with Spitzer late last year.

PayPal creates accounts for buyers and sellers using the Internet, including PayPal's parent, eBay, the Internet auction site. The service lets buyers and sellers exchange money through e-mail.

Besides the penalties, PayPal will pay New York state the investigation costs. The online payment service also will clearly describe consumer rights including conditions or limitations on their rights and refund policies.

Without the agreement, consumers using their credit cards through "e-payment" systems like PayPal would lose their protections under the federal Fair Credit Billing Act and similar state laws.

"Protecting consumer rights in online transactions is the best way to establish and maintain confidence in electronic commerce," Spitzer said.

PayPal has clarified that it will investigate any claims about a deal as long as the complaint is made within 30 days of the purchase.

PayPal vs. FreeCreditCardProcessing

Frequently Asked Questions PayPal vs. FreeCreditCardProcessing General Information Can you explain what a merchant account is and why I need one? Are there other options I can consider? Do I really need to accept credit cards? How do I get the money from a credit card sale? Can I go to a bank to get my merchant account? How do I find the right merchant service provider for my business? What do I need to open a merchant account and get set up to take credit cards? What makes a business risky to the processor? I am starting to understand how all this works but I am going to open an online Internet store Will I also be able to accept checks payments on my web site? While I now understand the components involved with online credit card payment processing, how do I actually implement this on my web site? Fees/Expenses Are there other fees or expenses involved? Those fees are less expensive than I thought it would be but there must be some other hidden fee I hear American Express and Discover are not used much and is more expensive than the discount fees Great, so it is not really an added expense to take American Express or Discover but there must be a fee from the credit card companies themselves How much should I pay for a terminal or software solution? I do not have much capital and want to save my money for marketing and other things I need to do What are some things I can do to reduce chargebacks not related to fraud? Risks and Safety I hear it is risky to accept checks but a lot of people do not use credit cards and prefer to write checks What else do I need to know about accepting Checks? Will I also be able to accept checks payments on my web site? Is it safe to process credit cards over the Internet? I hear so much about fraud and merchants losing money by accepting bad credit cards. What can I do to reduce the risk to me? More Information What if I already have a terminal? Can have it programmed by the new processor to work with Tell me about Government, Corporate credit cards, and Foreign Issued Credit Cards. Can I take them? What about debit or check cards? I hear this is a good idea if I have a retail store. I keep hearing about electronic terminals, software and real time processing software on the Internet. Can you explain these things? What is a virtual terminal? Can I use a virtual terminal to accept checks? GLOSSARY OF TERMS

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