PayPal Sues Consumer Protection Agency for 'Confusing' Digital Wallet Rules

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PayPal is suing the Consumer Financial Protection Bureau for requiring the firm to make "Misleading and confusing" disclosures about its fees.

CFPB makes PayPal provide disclosures about fees that it doesn't charge, the suit saysAccording to a Dec. 11 court filing seen by Cointelegraph, the CFPB mandates that digital wallets and GPR cards should be regulated the same way, which allegedly resulted in a "Fundamentally ill-suited" regulatory regime for PayPal digital wallets.

Specifically, the lawsuit refers to a new CFPB rule known as the "Prepaid Accounts Under the Electronic Fund Transfer Act and the Truth in Lending Act Rule." Adopted in April 2019, the rule allegedly requires PayPal to provide disclosures about fees that the company does not charge as well as misrepresent the actual fees paid by most customers, the firm claimed.

Simplified structure of fees requires PayPal to only include the highest possible feeBasically, the CFPB's rule requires PayPal to simplify its fee disclosures that "Undermine PayPal's own clear disclosures" and ban the firm from providing "The very information that would assist consumers in making an informed decision."

"The Rule mandates that customers be given - and actually view - 'short form' fee disclosures. The requirements for this short form disclosure are extremely prescriptive and rigid. Certain fee categories must be placed in specified positions and presented in certain font sizes The Rule further prohibits PayPal from including explanatory phrases within the disclosure box to describe the nature of these fee categories."

Apart from petitioning the court to deem the CFPB's rule unconstitutional, PayPal's prayer for relief asks the court to award PayPal its costs and reasonable attorney's fees as appropriate.

News of the lawsuit comes after PayPal revealed a better-than-expected quarterly profit as its payment platform recorded more users and transactions.

While apparently expanding its business, PayPal has cut some major partnerships recently, making more room for cryptocurrencies to fill the gap and enter the payments space.

In mid-November, adult entertainment website Pornhub revealed that PayPal had abruptly stopped servicing its models.

As reported by Cointelegraph, Verge - which is supported on Pornhub - skyrocketed in price right after news of PayPal ceasing business with the platform.