PayPal has been criticised for its treatment of business customers.

The Federal Court has determined that PayPal’s local unit included an unfair term in its standard contracts with small business customers, as reported by the Australian Securities & Investments Commission (ASIC).

The court ruled that the term was unfair because it forced customers to accept overcharging errors as accurate if they did not report these errors within 60 days. 

This decision followed court proceedings initiated by ASIC against PayPal in September of the previous year.

“Today's decision serves as a reminder to all businesses that unfair contract terms contained within standard form contracts with small businesses will not be tolerated, and that ASIC will take decisive action where appropriate to protect the rights of consumers and small businesses,” said ASIC Deputy Chair Sarah Court.

PayPal acknowledged the term’s unfairness and cooperated with ASIC throughout the investigation. 

The company agreed to the court’s declarations and voluntarily removed the term from its contracts on 8 November 2023. A PayPal spokesperson said the company has “been working in full cooperation with ASIC on this matter”.

Additionally, the court ordered PayPal to cover ASIC’s litigation costs.