PayPal commits to amending terms & conditions to fully comply with EU consumer rules

This article is brought to you in association with the European Commission.

Following a dialogue with the European Commission and national consumer authorities, PayPal has committed to modifying its terms and conditions to make them more transparent and easier to understand for consumers.

The Consumer Protection Cooperation Network (CPC), coordinated by the European Commission and led by the German authority Umweltbundesamt (German Environment Agency), started a dialogue with PayPal in May 2023. The network considered the company’s terms and conditions unreasonably difficult to understand and unfair for consumers. PayPal has agreed to address the issues raised by the consumer protection authorities and to amend the problematic clauses of its User Agreement to better comply with the Unfair Contract Terms Directive. The commitments made by PayPal will bring the company’s practices in line with the requirements of EU consumer law.

Overview of commitments:

PayPal has agreed to implement a number of changes and clarifications to several clauses of its User Agreement for consumers, in particular:

• clarify which clauses apply to consumers and which apply to businesses only;
• remove the provisions which require consumers to check the compliance with the law (for example, wording such as  ‘to the extent permitted by law’);
• make it clear that consumers are not liable for damage not caused by their fault or that could not have been foreseen;
• remove the provisions which impose on consumers the obligation to verify the information themselves (such as stating that PayPal cannot guarantee the accuracy of the information);
• ensure that consumers understand that they can benefit from the law of their country of residence in case of a dispute;
• remove terms which cannot be understood by consumers without further explanations or without verification by consumers, such as ‘merchantability’ or ‘non-infringement’.

The changes will be notified to users via a Policy Update on 21 February 2024 and will formally take effect on 28 May 2024.

Next steps

The Consumer Protection Cooperation Network (CPC) will actively monitor how PayPal implements the commitments in its terms and conditions, and where necessary, enforce compliance.

Background

Under EU rules, standard contract terms must be fair. They have to be drafted in plain and understandable language. The Unfair Contract Terms Directive (93/13/EEC) protects consumers against unfair standard contract terms imposed by traders.

The Consumer Protection Cooperation (CPC) is a network of authorities responsible for the enforcement of EU consumer protection laws. To tackle cross-border issues, their actions are coordinated at EU level.

National authorities are responsible for the enforcement of EU consumer protection laws. Thanks to the Consumer Protection Cooperation Regulation, they have a common toolbox of strong powers to detect irregularities and take speedy and coordinated action against non-compliant traders. Moreover, the new Directive on better enforcement and modernisation of Union consumer protection rules amended existing EU consumer law instruments by further enhancing transparency for consumers when they buy in online marketplaces.

Cooperation applies to consumer rules covering various areas such as unfair commercial practices, e-commerce, geo-blocking, package holidays, online selling, and passenger rights.

For More Information

Unfair contract terms

Consumer Protection Cooperation Network

More information on consumer enforcement actions

Quote(s)

We must ensure that consumers have access to clear and straightforward information from the beginning, so that they can decide whether or not to use a certain service. I appreciate PayPal’s efforts to make sure that its practices fully comply with our laws and act responsibly towards their clients in the EU.Didier Reynders, Commissioner for Justice – 13/12/2023