The Australian Securities and Investments Commission has taken Paypal Australia to court over an alleged unfair contract term with small businesses.
ASIC said the term in question gives PayPal business account holders 60 days to notify the payments company of any errors or discrepancies in fees that PayPal has charged them, or else accept those fees as accurate.
The regulator said the term is unfair because the effect of the term is to allow Paypal to retain fees it has overcharged or wrongly charged if the small business does not notify PayPal of the error within 60 days of the fee appearing in its account statement.
“ASIC has commenced this action to protect the interests of small businesses,” ASIC deputy chair Sarah Court said.
“We allege this term is unfair because it allows PayPal to escape the consequences of its own errors in overcharging small businesses, and places additional burdens on small businesses to detect and correct charging errors.”
ASIC added the term is also unfair within the meaning of s12BG of the ASIC Act, alleging that the term causes a significant imbalance in the parties’ rights and obligations under the contract; is not reasonably necessary to protect PayPal’s legitimate interests, and would cause detriment to PayPal business account holders if the term were relied on.
The regulator is seeking declarations that the term is made void, and is also seeking injunctions and corrective orders to Paypal Australia.
The contract term appears in PayPal’s User Agreement, one of the documents that form the contract between the company and its Australian business account holders.
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