PayPal customers will receive a 150 percent refund of fees. UOKiK decision

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Tomasz Chróstny, the President of the Office of Competition and Consumer Protection (UOKiK), raised concerns about the unlawful practices implemented by the online payment platform PayPal. The UOKiK highlighted that these practices involved altering contracts through an unjust modification clause and failing to adequately inform users about changes in fees.

According to a press release from the Office of Competition and Consumer Protection (UOKiK), it was found during the investigation that PayPal Europe had employed a modification clause in its contracts with Polish users, enabling it to unilaterally impose new fees and increase existing ones. Customers voiced their grievances, particularly regarding the inactivity fee that was introduced in 2020.

The President of the Office of Competition and Consumer Protection (UOKiK) rendered two binding decisions concerning PayPal. The contentious practices included altering the contract through an unfair modification clause and improper notification regarding fee changes.

The company has committed to cease these practices and to reimburse the fees incurred as a result, along with providing compensation.

Decisions from the Office of Competition and Consumer Protection regarding PayPal

The Office identified a clause in the standard contract utilized by PayPal Europe, effective since December 11, 2019, as abusive, stating that the company „may from time to time make changes to this user agreement and other documents”.

It also determined that the manner of notifying users about these changes could have violated the rights of PayPal account holders, including the requirement to convey such information on a durable medium.

In the view of the Office of Competition and Consumer Protection, the option to download a document from a website or application—which does not qualify as a durable medium—fails to ensure that it is the same version of the file originally uploaded.

„The entrepreneur then possesses the technical capability to modify the content of their website at will. Between sending the email with the link and downloading the document, the file may be altered or removed. Therefore, the law mandates that consumers receive essential information on a medium safeguarded against interference by the sender. A durable medium may consist of, among others, a paper document, a memory card, a flash drive, an email message, or an attached file such as a PDF. A mere hyperlink redirecting to a website does not satisfy the criteria of a durable medium,” the Office indicated.

The Office of Competition and Consumer Protection emphasized that any changes made by a business to a contract of indefinite duration also necessitate a suitable modification clause that, in accordance with regulations, clearly and unambiguously specifies the particular circumstances that would warrant such a change.

The contracts left us vulnerable to „unpleasant surprises”

Chróstny stated that consumers should not be caught off guard by modifications to their contracts, especially when these entail increased expenses. In payment services, the fees charged to consumers are a crucial factor in completing a transaction.

„Clauses permitting alterations to contract terms are acceptable, but they must be specific and enable consumers to anticipate changes in costs or service scope at the time of contract signing. The clause stating that the company „may from time to time introduce changes to (…) the contract” granted the entrepreneur unrestricted freedom and left consumers exposed to unpleasant surprises, including financial ones,” remarked the President of the Office of Competition and Consumer Protection.

As per the binding decision, PayPal will no longer utilize the modification clause for consumers, nor will it apply the changes that took effect on January 1, 2019, which imposed new fees for inactivity and withdrawals to a US bank account. The same applies to the changes implemented at that time, which raised fees for currency conversion.

Compensation for users

Under the agreed compensation terms, Polish PayPal users will receive a refund amounting to 150% of the fees incurred during the period when the contractual provisions contested by the President of the Office of Competition and Consumer Protection were active.

Current PayPal account holders will see the refund and compensation credited to their accounts within 10 months following the finalization of the President of the Office of Competition and Consumer Protection’s decision, without the need for any further action. Consumers who no longer maintain a PayPal account will also be reimbursed and compensated. The company will reach out to them regarding this matter, also within 10 months of the decision being finalized.

Consumers will also benefit from a temporary reduction in the exchange rate. This lowered rate will remain in effect until the total amount resulting from this reduction reaches 150% of the disputed increases.

The Office of Competition and Consumer Protection (UOKiK) noted that these decisions are not final and can be challenged in court.

As highlighted by the Office, these are not the first actions taken by the President of the Office of Competition and Consumer Protection against PayPal Europe – last year, a fine of nearly PLN 106.7 million was imposed on the company for utilizing prohibited clauses.

PayPal stands as one of the largest and longest

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