PayPal who is popular for transferring funds is suing US regulators over confusing prepaid card rules
According to the report by the Wall Street Journal, the company is challenging regulations introduced by the Consumer Financial Protection Bureau (CFPB) early this year, April to be precise, which requires Paypay accounts to guarantee the ae consumer protections as prepaid credit cards required PayPal accounts and other digital wallets to guarantee the same consumer protections as prepaid credit cards.
Most users link their credit cards to their accounts The issue is that most PayPal users link their credit cards to their accounts to aid payments. They can also store money in their prepaid account.
According to the company, the regulations from the CFPB focuses to make disclosures to its customers which are misleading and confusing. This includes the use of a short disclosure form references such as fees for balance inquiries from ATMs or for customer service.
This is however not the first time PayPal has clashed with the Consumer Financial Protection Bureau. They also clashed in 2015. CFPB filed a complaint against PayPal’s credit company called Bill Me Later. It alleged that the company signed up users to credit without their knowledge. PayPal had to pay the sum of $25 million in restitution and fees to settle the case.
The current complaint has been filed with the US District Court for the District of Columbia. PayPal is seeking to vacate the application of the prepaid card regulations to its products.