PayPal has been hit with a significant fine issued by the Polish competition and markets watchdog, the UOKiK, which took offence at clauses in the firm’s user agreement.
UOKiK has handed the US-based global payments giant a fine of PLN 106 million ($27.1m), stating that PayPal’s user agreement features prohibited clauses. These terms have also been banned by the regulator.
A regulatory assessment concluded the terms and conditions could lead to a situation in which a customer was unaware of actions prohibited by PayPal whilst being unable to foresee sanctions that might be applied to them.
Polish customers could potentially be deprived of access to cash in their PayPal accounts for an indefinite period, should they breach certain conditions. The regulator has cited specific examples of PayPal sanctions such as charges in excess of $2,500, closure of accounts without notice and denial of future services.
These sanctions could be incurred for 34 different activities, which have been questioned by the Polish regulator. These include a provision stating that users can be punished for attempting to use a blocked account.
UOKiK President, Tomasz Chróstny, remarked: “The nature of the violations is unprecedented. For a consumer, using PayPal’s services under the disputed clauses is unpredictable.
“PayPal’s clauses are generic, ambiguous and incomprehensible. When reading these provisions, a consumer cannot predict which of their actions may be considered prohibited, or what sanctions may be imposed on them by the entrepreneur.
“As a result, PayPal has unlimited discretion to decide whether a user has committed a prohibited act and what punishment he or she will face for it, which could be, for example, the blocking of money in the account.”
The fine is a blemish on what has otherwise been a generally positive year so far for PayPal, with the company having revealed new additions to its core product and further extending its engagement with and use of stablecoins.
Notable developments saw the launch of six new products and solutions in January, backed with artificial intelligence (AI) technology. The same month it would conduct its further ever investment with a stablecoin, and in may took its homegrown stablecoin, PAYUSD, live on the Solana blockchain.
Poland is not the only country where PayPal has encountered regulatory difficulties, however, as last month it – along with Apple Pay – were banned from being used for gambling transactions by the regulatory in Montenegro.
Regardless of some regulatory hurdles in some markets, PayPal remains a dominant force in the global payments sector, with its annual revenue for 2023 standing at $29.77bn, an increase of 9% the year prior.
