PayPal’s User Agreement Faux Pas

Erik Bernstein crisis communications, crisis management, Crisis Response, reputation management Leave a Comment

Unclear wording created a PR crisis for the payment service

PayPal found out firsthand the troubles incautious wording can cause after not only customers, but also industry regulators, voiced their concerns about its new user agreement. In it, PayPal PayPals User Agreement Faux Pasappeared to give itself the right to fire up the robocallers, stating users agree to allow “autodialed or prerecorded calls and text messages”. Along with a host of complaints from users and negative coverage in both traditional and online media came an message from the Federal Communications Commission, informing PayPal that its terms may be in violation of the Telephone Consumer Protection Act.

PayPal used a holding statement to buy some time, then shared the below explanation both on its site and via direct emails to users:

We value our relationship with our customers and work hard to communicate clearly. Recently, however, we did not live up to our own standards.
In sending our customers a notice about upcoming changes to our User Agreement we used language that did not clearly communicate how we intend to contact them. Unfortunately, this language caused confusion and concern with some of our customers.

To clear up any confusion, we will be modifying the terms of Section 1.10 of our User Agreement.  The new language is intended to make it clear that PayPal primarily uses autodialed or prerecorded calls and texts to:

– Help detect, investigate and protect our customers from fraud
– Provide notices to our customers regarding their accounts or account activity
– Collect a debt owed to us

In addition the new Sections (1.10(a) and 1.10(b)) will make it clear that:

– We will not use autodialed or prerecorded calls or texts to contact our customers for marketing purposes without prior express written consent
– Customers can continue to enjoy our products and services without needing to consent to receive autodialed or prerecorded calls or texts
– We respect our customers’ communications preferences and recognize that their consent is required for certain autodialed and prerecorded calls and texts. Customers may revoke consent to receive these communications by contacting PayPal customer support and informing us of their preferences.

In addition to this blog post, we will be sending our customers an email notice of this change. We have also been working proactively with regulators to clarify that our focus is on our customers, on consumer protection and on doing the right thing.

We appreciate the feedback our customers have provided to us on this issue and apologize for any confusion we may have caused.

Louise Pentland, Senior Vice President, General Counsel and Company Secretary, PayPal

Overall a solid statement, and PayPal’s claim to be working with regulators was supported in the best possible way when the FCC issued its own statement:

WASHINGTON, June 29, 2015 – Federal Communications Commission Enforcement Bureau Chief Travis LeBlanc issued the following statement in relation to PayPal’s commitments to improve their user agreement:

“I commend PayPal for taking steps to honor consumer choices to be free from unwanted calls and texts.  The changes to PayPal’s user agreement recognize that its customers are not required to consent to unwanted robocalls or robotexts.  It clarifies, rightly, that its customers must provide prior express written consent before the company can call or text them with marketing, and that these customers have a right to revoke their consent to receive robocalls or robotexts at any time. These changes, along with PayPal’s commitments to improve its disclosures and make it easier for consumers to express their calling preferences, are significant and welcome improvements.”

The FCC sent PayPal a letter on June 11, 2015, to clarify the company’s responsibilities under the Telephone Consumer Protection Act:

Being certain you’re saying exactly what you mean to can sometimes be difficult. Sometimes, what looks one way to every person in the room when you’re planning things out looks completely different when seen through the lens of an outsider. A host of factors including culture, life experience, geographic location and just plain unclear wording can all muddle your message if you’re not careful.

Erik & Jonathan Bernstein


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