Court finds PayPal contract term ‘unfair’ to retailers

A term in PayPal’s standard form contracts with small businesses in Australia – including retailers – has been ruled unfair by the Federal Court.

The ruling came after the Australian Securities & Investment Commission (Asic) lodged legal proceedings against the company last September.

Under the term, business account holders have 60 days to notify PayPal of any errors or discrepancies in fees that the financial platform has charged them, or else accept those fees as accurate.

The court deemed the term unfair as it allowed PayPal to retain fees that it had “erroneously charged” retailers if they had failed to notify within the 60-day period.

The court also declared the term void from the start of the contracts and ordered that PayPal be restrained from applying, relying on, or enforcing, the term.

The declarations affect small businesses entering a contract with PayPal between September 21, 2021 to November 7 last year. 

The company previously agreed with the Asic and voluntarily removed the term from its contracts on November 8. 

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