PayPal Reverses Course On Consumer Privacy in Response to Public Outcry

PayPal announced Monday that it will not use consumers’ phone numbers for marketing purposes without expressed prior written consent. The change of course came in response to a broad backlash over its updated user agreement scheduled to take effect on July 1, which would have required users to agree that their use of PayPal’s services grant the payment processing company consent to contact them via any phone number provided to the company or which PayPal has “otherwise obtained.” Consumers who called the company for customer support would be considered to have provided their phone number to PayPal.

The new user agreement specifies that PayPal “primarily” uses automated cellular communications to investigate fraud, collect debts, and notify customers of activity on their accounts. An affirmation of users’ right to opt out of these communications was also added to the modified agreement. By contrast, the previous agreement stated that users may also be contacted by phone to “contact you with offers and promotions” or “poll your opinions through surveys or questionnaires.” PayPal’s statement yesterday said that it would not market to consumers without having previously obtained expressed written consent from the recipient, and that users do not need to agree to receive communications by phone in order to use the company’s services.

“I commend PayPal for taking steps to honor consumer choices to be free from unwanted calls and texts.  The changes to PayPal’s user agreement recognize that its customers are not required to consent to unwanted robocalls or robotexts.  It clarifies, rightly, that its customers must provide prior express written consent before the company can call or text them with marketing, and that these customers have a right to revoke their consent to receive robocalls or robotexts at any time,”

FCC Enforcement Bureau Chief Travis LeBlanc said in a statement.

PayPal had faced a number of complaints from consumer groups about the original change of policy, including a letter to the F.C.C. by New York State Attorney General Eric Schneiderman which questioned the agreement’s legality under federal regulations. The Telephone Consumer Protection Act requires telemarketers to obtain written consent prior to robocalling – a term which encompasses both voice calls and text messages – consumers for marketing purposes. The F.C.C. voted on June 18th to tighten robocalling regulations and to allow cellular carriers to provide consumers with technologies to block all automated communications.

 

Read more about the recent F.C.C. vote on robocalling restrictions here.

Read a summary of the previous PayPal policy here.

Read the previous user agreement in full here.

Read PayPal’s statement announcing its new terms here.

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