PayPal Class Action Alleges Buy Now, Pay Later Fees Target Poor

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PayPal Buy Now, Pay Later Class Action Lawsuit Overview:

• Who: PayPal is being sued by a customer who used its “buy now, pay later” function and was charged fees.
• Why: The plaintiff says PayPal misrepresented the fees for the service, leading to customers being charged excessive fees.
• Where: The PayPal class action lawsuit was filed in California federal court.

PayPal targeted “poor” consumers with a deceptive offer to buy now, pay later that resulted in “huge, undisclosed fees,” a new class action lawsuit alleges.

In a $5 million class action complaint filed March 1 in a California federal court, Plaintiff Felipe Vidaurre said the payment technology company misrepresented the possibility of insufficient fund fees or overdraft charges in its “Pay in 4” offer. 

The service allows consumers to split payments into “four interest-free payments with no late fees.” 

However, Vidaurre says he and thousands of other similarly situated PayPal customers had been deceived about the true operation and risks of the service.

“These risks include the real and repeated risk of multiple insufficient funds fees or overdraft fees imposed by users’ banks as a result of automated PayPal transfers from consumers’ checking accounts,” he said. 

Vidaurre said that he faced three separate insufficient funds fees, totaling nearly $90, on a single repayment for a relatively small purchase. In his case, PayPal reprocessed payments that weren’t initially successful, triggering repeated fees, the complaint states.

PayPal “Pay in 4” Service Doesn’t Properly Disclose Fees, Plaintiff Alleges

“PayPal’s ‘Pay in 4’ service specifically targets poor consumers and those struggling to make ends meet on a week-to-week basis,” Vidaurre said.

As it doesn’t properly disclose its fees, it causes unsuspecting consumers like him to incur significant overdraft and non-sufficient fund fees on their linked bank accounts, he said.

“Unfortunately, PayPal’s operation, along with its deceptive and incomplete marketing materials, means that users like Plaintiff end up paying huge amounts of fees and interest, which PayPal falsely assures users they will not receive,” according to the class action lawsuit.

He’s suing under consumer laws and seeking damages, restitution, an injunction, fees, costs and a jury trial.

Afterpay, Klarna, and Affirm are three buy now, pay later companies that have already faced class action lawsuits in recent years for allegedly charging consumers undisclosed fees for using their services. 

The Afterpay class action lawsuit alleges the buy now pay later company targets young and poor consumers, duping them into believing they will not be charged interest or fees. 

The Klarna class action lawsuit alleges that the company makes repeated deductions from consumers’ bank accounts which can cause them to face multiple overdraft fees.

Meanwhile the Affirm class action lawsuit claims the company fails to provide refunds to consumers who return items, and consumers do not have the ability to dispute the transaction as they would if they paid with a credit card.

Did you incur excessive fees such as overdraft fees or insufficient funds after using Buy Now, Pay Later services, such as Affirm, Afterpay or Klarna? If so, you may have a legal claim. Click here for more details.

Vidaurre and the proposed class are represented by Jeffrey D. Kaliel and Sophia G. Gold of KalielGold PLLC and by Sco& Edelsberg of Edelsberg Law PA. 

The PayPal Buy Now Pay Later Class Action Lawsuit is Felipe Vidaurre v. PayPal Inc., Case No. 5:22-cv-01283, in the U.S. District Court for the Northern District of California.

Read About More Class Action Lawsuits & Class Action Settlements:

• Afterpay Dupes Consumers Into Multiple Fees, Claims Class Action Lawsuit
• Do You Qualify: Square Payment Fees Class Action Lawsuit Investigation
• PayPal, eBay Escape Bill Me Later Class Action Lawsuit
• Do You Qualify: Data Breach Lawsuit Claim Review