The Polish antitrust and consumer protection watchdog, UOKiK, has imposed a hefty fine on PayPal Holdings Inc. PYPL for using unclear contract clauses.
What Happened: UOKiK has fined PayPal Europe 106.6 million zlotys ($27.3 million) for not clearly outlining to consumers the activities for which they could be penalized in their contractual clauses, Reuters reported on Monday.
The watchdog stated that the prohibited activities were described in an ambiguous manner, making it difficult for users to understand what actions could result in penalties.
UOKiK’s President, Tomasz Chrostny, criticized PayPal’s clauses for being “general, ambiguous, and incomprehensible.” He added that this ambiguity gives PayPal the power to unilaterally decide if a user has violated a clause and what penalty they will face, which could include freezing funds in the user’s account.
PayPal has the option to appeal the decision in court, according to UOKiK.
“PayPal is committed to treating its customers fairly and giving them accurate, easy to understand and transparent information,” the company said, according to the report. “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,” it added.
Why It Matters: This fine is not an isolated incident for PayPal. Recently, the company faced scrutiny in Australia. Last week, the federal court ruled that PayPal’s local unit had an unfair term in its contracts with small businesses, leading to overcharging.
The Australian Securities & Investments Commission highlighted that customers who failed to report errors within 60 days had to accept the charges as accurate.
Moreover, PayPal is undergoing significant changes in its leadership and strategy. In late June, RBC Capital analyst Daniel Perlin reiterated that PayPal’s new leadership is poised to drive profitable growth, with fiscal 2024 marked as a transition year for the company.
However, the company is also facing increased competitive pressures. In June, Goldman Sachs analyst Will Nance noted that PayPal’s competitive positioning in online payment processing is under threat from mobile and web-based wallets.
Price Action: PayPal stock closed at $60.24 on Friday, marking a gain of 0.42% for the day. In pre-market trading, the stock rose by 0.93%. However, year to date, PayPal has seen a decline of 1.99%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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