Spitzer: PayPal to better disclose Internet buyers' rights
By MICHAEL GORMLEY
Associated Press Writer
March 8, 2004, 5:33 PM EST
ALBANY, N.Y. -- PayPal, the nation's largest online payment service, has agreed to start making sure Internet consumers get credit when their merchandise doesn't arrive, New York Attorney General Eliot Spitzer said Monday.
PayPal will pay New York state $150,000 in penalties and the cost of the investigation. The online payment service also will clearly describe consumer rights to its more than 25 million account members including conditions or limitations of the rights and reversals or refund policies.
Without the agreement, consumers using their credit cards for Internet purchases through payment services would not have been protected by the federal Fair Credit Billing Act and similar state laws. For example, consumers who didn't receive merchandise purchases through PayPal were often denied credit from either PayPal or American Express or Discover credit cards.
The credit card firms agreed to properly credit consumers in an agreement with Spitzer late last year. The firms are issuing "chargeback" credits to those who didn't receive credit for undelivered items
"Protecting consumer rights in online transactions is the best way to establish and maintain confidence in electronic commerce," Spitzer said. "As with any new industry, it is essential that consumers making e-payments receive full disclosure of their rights and liabilities."
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Posted by iang at March 8, 2004 05:12 PM | TrackBackEverybody agrees that consumer rights ought to be protected.
Everybody agrees that people ought to have full disclosure of their rights and obligations.
The question is, what does that have to do with the settlement system? and who should profit? And whether the country should go on another hundred years posting all our transactions at banks.
Eliot Spitzer should go out and enforce the fraud laws instead of coercing all kinds of costs back on the users of the card services infrastructure. Why do we need fraud losses to be insured by the settlement providers? PayPal uncoupled them. That should be left to consumer choice. Spitzer's action is tantamount to a ban on the emergent reputation and identity frameworks, by subsidizing fraud losses, making reputation of the seller the business of Banks not the buyer.
Posted by: Todd Boyle at March 8, 2004 06:30 PMThis is mostly it - PayPal has attracted the attention of the regulators, and it hasn't cleaned up its house in the meantime. Its fraud unit has always been thought to be particularly vulnerable to regulation, due to its sweeping freezes of many accounts - clearly actions of some disappointment to many consumers who have had their funds frozen because they once purchased from someone who was defrauded...
But, also, the warmth that PayPal is feeling could be a warning to others to ... get ready for more scrutiny. I think the fraud approaches of the (some) DGCs are more robust, but it will be interesting to see what regulators say on the DGCs' fraud handling.
Posted by: Ian Grigg at March 8, 2004 06:39 PM