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FCC: New PayPal User Agreement Runs Afoul of Federal Robocall Rules

June 19, 2015
By Tracey E. Schelmetic - Telemarketing Software Contributor

Many consumers today use online services such as PayPal (News - Alert) and eBay. Far fewer of them pay much attention to the user agreements they give their permission to abide by before they can use the services. It’s understandable: few people have the time to read 15 pages of legalese before they can sell an old snowboard from the garage. Some of these Web services providers are garnering negative attention, however, for the invasive tactics they demand customers allow them to use. Online payment service PayPal is now attracting the ire of the Federal Communications Commission (FCC (News - Alert)).

PayPal recently announced plans to launch a new user agreement that will go into effect on July 1. The updated agreement states that PayPal can engage in automated outbound calling – a/k/a “robocalls” --  and text messaging “any telephone number that you have provided us or that we have otherwise obtained.” According to the Web site The Consumerist, this means that even if users make every attempt to keep a phone number out of PayPal’s hands, the company can still contact users with a robocall if they acquire that number through other means…through a business partner, for example. The problem is that this provision is against the law.

The FCC recently notified PayPal that it its revised user agreement may be in violation of the Telephone Consumer Protect Act (TCPA), a law that prohibits robocalling without express written permission of consumers. According to the Consumerist, the letter, which was signed by the chief of the FCC’s Enforcement Bureau, indicated that the federal agency is concerned that the amendments to the existing agreement “may violate federal laws governing the use of autodialed, prerecorded, and artificial voice calls, including text messages.”

“If PayPal plans to make autodialed, prerecorded, or artificial voice calls or text messages to its customers, please be aware that federal law places strict limits on such communications,” reads the letter from the FCC, which describes prerecorded marketing calls as a “greater nuisance and invasion of privacy than live solicitation calls,” and that “can be costly and inconvenient” for consumers.

It could also turn out to be a costly mistake for PayPal. Violations of the TCPA can run up punitive fees of $16,000 per illegal call or text message. The agency informed PayPal that consent must be obtained from the called party in writing (actually bearing the signature of the called party), and users must be provided with a visible “opt out” process.

The full copy of the FCC’s letter to PayPal’s general counsel may be found here