According to the Australian Securities and Investments Commission (ASIC), the court found the terms were unfair because customers who did not report overcharge errors to PayPal within 60 days were forced to accept the fees as correct.
ASIC launched proceedings against PayPal over the issue in September last year.
“Today's decision is a reminder to all businesses that unfair contract terms included in standard contracts with small businesses will not be tolerated, and ASIC will take robust action where appropriate to protect the rights of consumers and small businesses,” ASIC Deputy Commissioner Sarah Court said.
ASIC said PayPal cooperated voluntarily during its investigation.
According to the regulator, PayPal agreed that the clause was unfair, agreed to the declaration, and voluntarily removed it from its contract on November 8, 2023.
The court also ordered PayPal to pay ASIC's legal costs.
PayPal did not immediately respond to a request for comment.
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Reporting by Himanshi Akhand in Bengaluru; Editing by Mriganku Dhaniwala and Sonia Cheema
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