'Far From Consumer Friendly' - PayPal Slammed In Class-Action Suit Accused Of Forcing Higher Price

PayPal Holdings, Inc. PYPL is facing a consumer antitrust lawsuit in a federal court in San Jose, California, accused of engaging in anticompetitive practices. 

PayPal charges merchants the highest transaction fees in the industry (more than 3.5% per eCommerce transaction), according to the lawsuit.

"If consumers were allowed to see behind PayPal's pricing veil, they would see a clear and distinct difference between using PayPal and Venmo to complete their transactions and using its competitors," said Steve Berman, managing partner, and co-founder of Hagens Berman, the law enterprise representing the suers. "For a service named for its friendliness, PayPal is far from consumer friendly."

Also Read: PayPal Files Patent Application, Looks To Integrate Payment Solutions With NFTs

As per the lawsuit, PayPal uses "anti-steering" rules to subdue competition from lower-cost platforms.

Attorneys said PayPal's policies are illegally anticompetitive and led to consumers paying higher prices for e-commerce transactions. Merchants also cannot tell customers that other payment methods are more cost-effective or preferred, according to the complaint.

In the case of PayPal, which owns Venmo, the plaintiffs allege that the company strictly prohibits offering price discounts when consumers use non-PayPal means of payment. 

"PayPal continues to put our customers first in everything that we do, and we take this responsibility seriously," the company told Reuters in a statement.

Price Action: PYPL shares are trading lower by 0.90% to $56.96 premarket on the last check Friday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.