Online payment system PayPal (Europe) is facing charges by Poland’s Office of Competition and Consumer Protection (UOKiK), after possible agreement failures.

The Polish watchdog has concerns with three provisions of the “PayPal User Contract” agreement:

• a list of prohibited activities;
• a list of sanctions;
• and a ban on using an account when it is blocked or suspended.

UOKiK says it could fine the company up to 10% of its turnover if it rules that there are problems with PayPal’s user agreement.

“Contracts, and especially those parts of them that define the negative consequences of prohibited actions, must be phrased in a simple and understandable, but at the same time precise, language and be based on clearly defined criteria.”

Tomasz Chróstny, President of the Office of Competition and Consumer Protection

Unclear and complex

The regulator says that prohibited actions have been described imprecisely, and lacked specific examples or clarification of unclear and complex terms. UOKiK President Tomasz Chróstny believes that the documents may be the opposite to best practices and instead “lead to a gross disproportion of rights and obligations” between the user and the company.

“Contracts, and especially those parts of them that define the negative consequences of prohibited actions, must be phrased in a simple and understandable, but at the same time precise, language and be based on clearly defined criteria. Consumers should be able to anticipate the consequences of their actions while feeling assurance regarding the safety and ability to use their financial resources”, said Chróstny.

“Accordingly, it is inadmissible for the Company to indemnify itself from any liability while freely imposing such severe sanctions as, for example, blocking funds or closing the account.”

Compliance obligations

In a statement given to Reuters, PayPal said it “remains deeply committed to its compliance obligations and the company works closely with regulators around the world to adhere to all applicable rules and regulations in the markets in which we operate”.

The preliminary investigation procedure began in December 2021. Tomasz Chróstny said: “The scope of these rights, which the company has granted itself in the bylaws, is very broad – it is even possible for the company to unilaterally terminate the contract without notice. During the investigation, we will check whether PayPal arbitrarily decides to suspend services and block funds on users’ accounts without giving any reasons or indicating violations committed by them.”