The Federal Court of Australia has ruled that PayPal's local subsidiary used an unfair term in its standard contract with small business customers who failed to identify overcharging errors, the country's securities regulator said on Friday.
The court found the term unfair as it forced customers to accept overcharges as accurate if they did not notify PayPal of the error within 60 days, the Australian Securities and Investments Commission (ASIC) said.
ASIC sued PayPal in September last year.
"Today's ruling serves as a reminder to all businesses that unfair terms in standard contracts are intolerable for small businesses, and ASIC will take decisive action when necessary to protect the rights of consumers and small businesses," said ASIC Deputy Chair Sarah Court.
ASIC stated that during its investigation, PayPal proactively assisted the agency’s efforts.
According to the regulator, PayPal agreed the term was unfair, accepted the declaration, and voluntarily removed the term from its contracts on November 8, 2023.
The court also ordered PayPal to pay ASIC's legal costs.
PayPal did not immediately respond to a request for comment.
