Guest Commentary on PayPal's new Terms of Service Agreement
By Mike Fleming

If one has a PayPal account, as I do (at least for the next 27 days and counting that is, or until I agree to the “New User Agreement”) they might be supportive of any sort of legislation that would prohibit those menacing advertisements that require the account holder to click the “Continue To My Account Button.” However, I am inclined to think that PayPal would be first in line to oppose such legislation and would further offer they would not reveal to us the real reason why.

The story changes with each person I have asked yet it is essentially the same and plays out something like this: “On Monday there was a soap advertisement and I clicked the button to continue through it. Tuesday it was a software product I can‘t recall and I clicked through that as well. Wednesday it was a blurb about some sort of New Agreement and if I didn’t click the word “Yes” on three boxes they would close my account, so of course since I had over $367 in my account, I clicked the “Continue” button one more time.” And that is how millions of American consumers blindly agreed to PayPal’s twenty-five page New User Agreement that prohibit them from filing suit against PayPal for any dispute under $10,000 and requiring them to agree to arbitration at their own expense in the event of disagreements with the company.

Of course it would not be fair of me to write of this without providing you with PayPal’s version of what any reasonable person would consider a classic and blatant episode of consumer fraud. “PayPal has recently made several important changes to our User Agreement and Privacy Policy. Please read the new User Agreement and Privacy Policy, because they contain important information about your PayPal account, your rights as a PayPal user, and the ways in which PayPal will use your personal information.” Then if you click a link that is embedded in the words “several important changes,” you get a more detailed version of these important changes (three to be exact). The first reason, and logically in my mind, the most important is: “We wanted to consolidate all of our legal documents to make them easier for you to read, navigate and understand.” What a great idea they have, I thought to myself because it is a bit confusing. The second reason is “We wanted to re-organize the information so you more easily understand your legal rights and obligations and to help you find answers to your questions our various services more quickly.” Again, I could not agree more! I’ve always found it difficult to read the agreement and am starting to gain a new found respect for PayPal. The third reason is a one line sentence that seems rather unimportant so I just glance over it rather quickly and it says “We decided to update our arbitration clause in order to clarify your dispute resolution alternatives.” Now I’m not the brightest light bulb in the hallway, but buried on this second page and under the first two reasons I may have finally found the catch.

What a coincidence it is that PayPal “decided” to update their arbitration clause several months after their motion to enforce the arbitration clause was denied by a judge in San Francisco, California on the grounds that it was unfair to consumers. And as they trudge along the path of what might be one of the largest class actions lawsuits of the year, their timing is interesting in that it essentially tricked many of the company‘s customers into giving up that right and affording PayPal the opportunity to limit their potential damages and forcing everyone who may have wanted to perform a financial transaction on PayPal over the past several months into a binding twenty-five page contract.

Is this deceit? If I were a customer service representative that answers the unlisted phone number and talks to the very smart and persistent (and mostly enraged customers) who go to great lengths to find the number as it does not appear in the User Agreement and I‘ve yet to find it while navigating the hundreds of pages of, I would say what I was told to say… “Go to our website and click on the Help Section and submit it to us on the contact form.” However, I would predict that at some point in the future an attorney representing the company will be standing before a judge explaining that everyone was cleary told to read the agreement and of course it is was a legally binding and simple contract that fell within the criteria of the law and was a meeting of the minds.

The fact is my wife wanted to pay for a toy she bought on Ebay for our son and was in a hurry, so if they got you too, don‘t feel so bad cause she‘s pretty sharp. Here are four more facts and I’ll lay them out for you as PayPal might: (1) When your done reading this article you will have read a lengthy 907 words. (2) The Declaration of Independence contains a whopping 1,335 words! (3) The Louisiana Purchase Treaty dwarfs The Declaration of Independence and swells at 3,425 words!!! (4) PayPal’s User Agreement is easily readable in one sitting at a measly 26,540 words.

Guest commentary by Mike Fleming