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Unfair Contract Term in PayPal’s Agreements Impacts Small Businesses in Australia

Australia’s federal court recently ruled that PayPal (NASDAQ:PYPL) Australia included an unfair term in its standard contracts, resulting in incorrect fee charges for small businesses. This issue was brought to light by the Australian Securities and Investments Commission (ASIC).

The problematic clause allowed PayPal (PYPL) to keep ‘erroneously charged fees’ if affected customers did not report the error within 60 days of the fee being added to their account statement.

This ruling has significant implications for small businesses that established a PayPal business account between September 21, 2021, and November 7, 2023.

The fintech company cooperated with the investigation, acknowledged the unfair nature of the term, agreed to the declarations made by the court, and promptly removed the clause from its contracts on November 8, 2023, according to ASIC.

Furthermore, the court invalidated the unfair term retroactively and instructed PayPal (PYPL) to cover ASIC’s legal expenses related to the case.

Despite this legal setback, PayPal’s stock experienced a slight decline of 0.23% to $59.64 in pre-market trading on Friday.

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