The fintech giant faces strong legal backlash following an investigation by consumer rights attorneys at top law firm, Hagens Berman after alleging that the company’s recent anti-steering rules has not only subjected its users to excessive charges while carrying out transactions with e-commerce websites who typically receive payments via the payment network or alternatively, Venmo but also allegations of stifling smaller competitors such as Shopify and Strife have also been put forward in the class action suit.
It has been revealed that PayPal’s merchant agreement which is a prerequisite for sellers on the platform forces customers to pay more. Some shocking amendments to this agreement hold that PayPal prohibits companies from suggesting cheaper payment methods as well as refusing merchants from offering discounts in order to promote the use of alternative payment portals, these findings have sent both customers as well as competitors of the fintech giant in an outrage.
Hagens Berman’s attorneys have deemed PayPal’s anti-steering rules illegally anticompetitive and state that customers should be able to see price comparisons between PayPal, Venmo and competitors supposing the agreement was fair and transparent. Further in the statement, attorneys say that the company earned $27 billion in revenue in 2022 which was generated from additional fees imposed on over 400million of its customers, with 41 million transactions processed via nearly a million e-commerce websites daily.
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PayPal has since put out the following statement.
“PayPal continues to put our customers first in everything we do, and we take this responsibility seriously. We are reviewing the filing and have no further information to share at this time.”