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Texas Personal Injury News

Tuesday, June 14, 2016

PayPal Settles Deceptive Practices Claim

How did PayPal violate the Texas Deceptive Trade Practices Act

PayPal's Venmo money transfer app has gained popularity with consumers who prefer to transfer funds on a wide range of transactions rather than relying on credit and debit cards. Unbeknownst to them, however, PayPal was sharing information about their phone contact and user information.

The Texas Attorney General filed a suit against PayPal alleging the company violated the Texas Deceptive Trade Practices Act (DTPA) for not clearly disclosing how it would share information about consumers' phone contacts, transactions and interactions with other users. Last month, PayPal settled charges with the state for practices that may have publicly exposed personal consumer information.

PayPal has agreed to pay the state $175,000 of which $135,000 is a penalty and the remaining $40,000 will cover the state's costs and attorneys' fees. Going forward, the company must conspicuously disclose the type of information that will be accessed from consumers' PayPal accounts and how the company is authorized to use the information. The company must also provide consumers with an explanation of how its "autofriend" feature works and how it can be disabled. PayPal failed to disclose that this feature enabled the company to gain access to information about how users interacted.

PayPal has also agreed to make a number of additional disclosures about security features, payment procedures, protections available to buyers and sellers, and to implement other transparency measures. The company's problem's however, may not end with this resolution or its previous settlement with the Federal Trade Commission related to the Venmo app.

It is unclear at this juncture whether individual consumers plan to take legal action against the company, however. In order to do so, they would need to demonstrate that PayPal committed false, misleading or deceptive practices under the DTPA which caused a financial injury. The settlement with the Texas Attorney General does not indicate whether consumers suffered financial harm due to PayPal's flawed disclosure and information sharing policy.

While deceptive trade practices claims are not uncommon for large consumer businesses, any outfit that offers good and services to consumers can run afoul of the DTPA. If you believe you were the target of an unfair or deceptive practice, you should engage the services of an experienced consumer law attorney.


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