PayPal’s ‘unfair contract clause’ with small businesses that led to overcharging thrown out by Australian court – PayPal Holdings (NASDAQ:PYPL)

In a recent development, the Federal Court of Australia has ruled that the local unit of PayPal Holdings Inc. Pypl had an unfair clause in its contracts with small businesses, which led to cases of overcharging.

What happened:The Australian Securities and Investments Commission (ASIC) said the court had ruled that PayPal’s clause was unfair, Reuters reported on Friday. That particular clause required customers who failed to report overcharging errors within 60 days to accept the charges as accurate.

The legal proceedings against PayPal were initiated by ASIC in September of the previous year. ASIC Deputy Chair Sarah Court said: “Today’s decision serves as a reminder to all businesses that unfair contract terms in standard contracts with small businesses will not be tolerated.”

Paypal has not yet responded to requests for comment from Benzinga.

See also: Mark Zuckerberg’s PR team couldn’t stop him from posting: ‘My spine was surgically removed,’ former Facebook exec says

Why is this important?:ASIC revealed that PayPal had voluntarily cooperated during the investigation. The company acknowledged that the clause was unfair, accepted the court’s declarations and voluntarily removed the clause from its contracts on 8 November 2023. The court also ordered PayPal to pay ASIC’s legal costs.

The move comes at a time when PayPal is in a transition phase. The company’s new leadership and strategy are expected to drive long-term profitable growth. The company’s stock closed at $59.51 on July 5, 2024, down 0.22% from the previous close.

Price action: On Wednesday, Paypal closed at $59.64 and was trading down 0.23% at $59.50 in Friday’s premarket, according to Benzinga Pro.

Read more :

Photo: Lets Design Studio/Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari