FCC: PayPal's Robo-Texting Policy Raises 'Serious Concerns'

Earns EBay
Paul Sakuma/AP
By Bob Sullivan

The Federal Communications Commission sent a letter Thursday to PayPal that was highly critical of the firm's robocalling and robo-texting fine print, which I first chronicled earlier this month. The letter says PayPal's new terms of service "raise serious concerns for the [FCC] enforcement bureau."

In a report last week, I described an update to PayPal's user agreement that is set to take effect in July, when the payment firm is set to split from corporate parent eBay (EBAY). In those terms, the firm says users must agree to grant PayPal the right to robocall or robo-text them at any phone number "you have provided to us or that we have otherwise obtained." The calls and texts can be used in attempts to collect debts, for marketing purposes or a host of other reasons, the agreement says. On its Facebook page, PayPal recently told a consumer that there was no opt-out for the provision.

In a letter signed by Travis LeBlanc, chief of the FCC's Enforcement Bureau, the agency said much of the policy could violate federal law:
"FCC requirements directly prohibit requiring a consumer to consent to receive autodialed or prerecorded telemarketing or advertising calls as a condition of purchasing any property, good, or service, and the company must give consumers notice of their right to refuse to give such consent," the letter says. "PayPal 's amended User Agreement does not give consumers notice of their right to refuse consent to calls that require consumer consent from PayPal, its affiliates, and its service providers. If PayPal fails to include this required notice and/or fails to allow its users to refuse such consent, we are concerned that consent is in fact a condition of purchase of PayPal's service and thus violates the Telephone Consumer Protection Act and could subject PayPal, its affiliates, and its service providers to penalties of up to $16,000 per call or text message.

"Second, we direct your attention to the requirement that the written agreement must identify the specific telephone number(s) to which the consenting consumer gives his or her consent to be called or texted," it continues. "A blanket User Agreement that purports to apply to 'any telephone number that [consumers] have provided us or that we have otherwise obtained' does not meet the level of specificity required by law. Many consumers have more than one telephone line. Consumers have the right to choose on which line(s) they wish to receive telemarketing or advertising calls, if they elect to receive such calls at all.

"Finally, the Commission has ruled that should any question about the consent arise, the seller will bear the burden of demonstrating that a clear and conspicuous disclosure was provided and that unambiguous consent was obtained," it says. "We direct your attention to this statement because it underscores the importance of complying with federal law when structuring your agreements to collect the prior express written consent of consumers."
The letter was addressed to Louise Pentland, PayPal's general counsel.

"We have received a letter from the FCC and look forward to responding," PayPal said in a statement. "We strive to be as clear as possible with our customers and clarified our policies and practices last week on the PayPal blog."

In that post, Pentland noted the robocalling and robo-texting language isn't new, and consumers can opt out, though the post doesn't explain why PayPal said previously there was no opt out.

"We value our relationship with you and have no intention of harassing you," it read, in part. "Our contacts with you are intended to benefit our relationship. For example, we may contact you as part of our fraud prevention efforts to keep your PayPal accounts safer and more secure. In reaching out to you for account service purposes, such as fraud alerts, we occasionally use technologies that allow us to contact you efficiently. To use this approach we seek your permission through our User Agreement.

"Our goal is always to create clarity in our communication with our customers. We're sorry if this wasn't the case. We aim to give you the information you need and hope this blog post helped to clear up any confusion," she wrote.
Read Full Story