PayPal sued Federal Bank over prepaid rule
2019-12-14![PayPal sued Federal Bank over prepaid rule PayPal sued Federal Bank over prepaid rule](https://varindia.com/storage/news/uploads/2018/02/5df4a8518a99d.jpg)
PayPal has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) arguing that digital wallets should be exempt from the regulator's recently introduced rule on prepaid cards.
It alleging that its new rule has hampered the company’s ability to offer credit products and has created confusion among users of its popular digital-payment services PayPal and Venmo.
In a suit filed in the US District Court for the District of Columbia, PayPal says the prepaid rule, introduced in April, forces it to make irrelevant disclosures that confuse customers.
Under the rule, PayPal and Venmo need to give customers "short form" fee disclosures containing categories - such as fees for ATM balance inquiries and electronic withdrawals - that are not relevant.
PayPal said in its complaint filed with the U.S. District Court for the District of Columbia. “The resulting regulatory regime is fundamentally ill-suited to PayPal digital wallets and is likely to mislead or confuse consumers.”
The suit further says this has confused PayPal customers, who mistakenly think that they are being charged fees for a host of actions. PayPal says it should not have been subjected to the rule, which is designed for providers of reloadable prepaid cards and the rule is a violation of the First Amendment because it forces speech, and calls for the court to vacate.
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