PayPal Fined $27 Million for Contract Violations in Poland

A Polish regulator fined PayPal $27.3 million over allegedly “unprecedented” user agreement violations.

The Office of Competition and Consumer Protection (UOKiK) said in a Monday (July 15) press release that it determined PayPal’s contract language did not inform consumers which activities could cause them to incur penalties.

“The nature of the violations is unprecedented,” said UOKiK President Tomasz Chróstny in the release. “For a consumer, using PayPal’s services under the disputed clauses is unpredictable. PayPal’s clauses are generic, ambiguous and incomprehensible. When reading these provisions, a consumer cannot predict which of their actions may be considered prohibited, or what sanctions may be imposed on them by the entrepreneur.”

As a result, Chróstny added in the release, PayPal has unchecked power to decide if a user had committed a prohibited act and the appropriate punishment, such as blocking access to their funds.

UOKiK had concerns over clauses outlining 34 prohibited activities for users and their corresponding sanctions, per the release.

These include provisions saying that users would be punished simply for attempting to use a blocked account. PayPal also warned that violating “any law, statute, ordinance or regulation” could run the risk of unspecified sanctions, according to the release.

“In practice, violation of any regulation in any country entitled PayPal to apply sanctions,” the release said. “The violation could even be unrelated to the use of a PayPal account, leaving consumers unaware that they have done something inconsistent with the contractual provisions.”

Reached for comment by PYMNTS Monday, a PayPal spokesperson provided this statement: “PayPal is committed to treating its customers fairly and giving them accurate, easy to understand and transparent information. We have been working closely with UOKiK throughout its investigation, and we are reviewing today’s announcement. As UOKiK states, this decision is not final and there will be an opportunity to appeal.”

UOKiK’s fine came 10 days after Australia’s federal court found that a term in PayPal’s contract for local small businesses is unfair.

Those contracts, the ruling said, allowed PayPal to retain fees it had erroneously charged if the small business failed to notify PayPal of the error within 60 days of the fee appearing on its account statement.