In a landmark ruling, Australia’s federal court has declared that PayPal’s local unit used an unfair term in its standard contracts with small business customers who failed to report errors in overcharging. The court found that customers who did not point out overcharging errors to PayPal within 60 days were required to accept the fees as accurate.
ASIC Deputy Chair Sarah Court emphasized the importance of businesses avoiding including unfair contract terms in standard form contracts with small businesses. She stated that ASIC will take action to protect the rights of consumers and small businesses. PayPal cooperated with ASIC during the investigation and agreed that the term was unfair. They consented to the declarations and removed the term from their contracts voluntarily on November 8, 2023.
The ruling by the federal court serves as a warning to all businesses about including unfair terms in contracts with small businesses. The ASIC is committed to taking decisive action to uphold consumer and small business rights in similar cases.
PayPal has not yet provided a comment on the court’s decision, but it is clear that this ruling sets a precedent for future cases involving unfair contract terms in standard form contracts with small businesses.