Australian court rules PayPal used unfair term in small business contracts By Reuters

(Reuters) – An Australian federal court has found that the local unit of PayPal (NASDAQ:) used an unfair term in its standard contracts with small business customers that overlooked overcharging errors, the country’s securities regulator said on Friday.

The court found the clause was unfair because customers who failed to report overcharging errors to PayPal within 60 days were forced to accept the charges as correct, the Australian Securities and Investments Commission (ASIC) said.

ASIC initiated legal proceedings against PayPal over the issue last September.

“Today’s decision serves as a reminder to all businesses that unfair contract terms in small business standard contracts will not be tolerated and ASIC will take decisive action where appropriate to protect the rights of consumers and small businesses,” said ASIC Deputy Chair Sarah Court.

ASIC said PayPal voluntarily assisted it during its investigation.

PayPal agreed that the clause was unfair, consented to the statements and voluntarily removed the clause from its contracts on November 8, 2023, according to the regulator.

The court also ordered PayPal to pay ASIC’s litigation costs.

PayPal did not immediately respond to a request for comment.