With PayPal’s recent changes to its User Agreement, Privacy Policy and PayPal Here Agreement, users should take note of several important service revisions – and the changes provide a good reminder to pay attention to those ubiquitous “our policies have changed” notices we all receive.

While PayPal’s updates restate current policy they also announce modifications that range from changes in seller protection requirements to data collection practices. While these developments may seem less than earth shaking it’s important that every PayPal user (both consumer and business) understand how the amended agreements may effect them.  The entire list of applicable PayPal policies – 22 in all – is available for review at a dedicated Legal Agreements for Paypal Services page.

Most notably, the biggest revision occurred within seller protection requirements in Section 11.1, PayPal Seller Protection, of the amended User Agreement. Starting May 15, the threshold for signature confirmation for deliveries was increased from to $250 to $750. While users can still track packages throughout the shipping process, sellers are now only required to provide signature confirmation for shipments of goods over $750.

In terms of dispute resolution, PayPal has reiterated their goals to protect both the buyer and seller during transactions.  Per the previous and current User Agreement language (Section 13.5, Dispute Resolution), users must file a dispute within 45 days of the date the transaction took place. Unfortunately, many individuals were not cognizant of this time constraint, which has inevitably left consumers who’ve remained unaware of the time limit with little means of resolving a valid concern (which is likely why PayPal is again stressing the 45 day filing period).

PayPal also highlights (again in Section 13.5, Dispute Resolution) that users have a 20 day period to escalate a dispute to a “claim.” During these claim instances, PayPal will become involved with the ongoing dispute and will ultimately render a decision in favor of the buyer or seller. If you are not satisfied with PayPal’s decision, the likely alternative is to contact the credit card issuer and attempt to further resolve issues there. While no substantive terms have changed in the dispute resolution process itself, PayPal appears to be just offering and reinforcing a “friendly reminder” of the caveats and limitations associated with their ongoing handling of disputes.

Subsequently, the amended PayPal User Agreement emphasizes changes when dealing with merchants. Merchants that subscribe to the service PayPal Here, which enables merchants to accept different types of payments at a physical location (credit cards, PayPal etc.) may now be subject to withdrawal limits on keyed or scanned transactions (at the discretion of PayPal). If withdrawal limits are implemented, merchants can access the limited funds after 30 days from the time the transaction was completed. PayPal may also require additional means of collateral from merchants such as a Letter of Credit, if PayPal deems there is a significant amount of risk associated with the account. Similarly, PayPal can request access to a merchant’s finances to assess the risk or integrity of a business.

PayPal’s upcoming modified Privacy Policy also makes note of how they collect and use data on a daily basis. Merchants and buyers are required to grant PayPal a broad license to any content submitted to PayPal, where PayPal can use their trademarks, logos, and pictures to further advance their business. Furthermore, PayPal accentuates just how important cookies and other information such as IP addresses are, as they are used to combat fraud and also aid in the resolution of disputes. PayPal lastly mentions that they currently do not abide by any “Do Not Track” requests, as it can interfere with these aforementioned functions. This particular aspect of current policy was amended to specifically address California’s “Do Not Track” legislation that became effective at the start of 2014 (AB370: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB370).

In essence:

• PayPal has increased the threshold for signature confirmation from $250 to $750.
• Timed withdrawal limits can be imposed at PayPal’s discretion for merchants using PayPal Here.
• Measures of collateral and financial audits may be required for merchants utilizing PayPal Here.
• Users and merchants grant PayPal a broad license to use content submitted to PayPal.
• Cookies and other web analytics tools will be used to combat fraud and resolve disputes.
• PayPal addresses California’s new “Do Not Track” law and will not follow DNT requests.

PayPayl’s changes don’t strike us as either “out of the ordinary” or particularly onerous in the broad aggregate, however, it’s a good reminder that e-commerce is neither static nor free from peril – for all involved.  To discuss any questions or concerns you may have regarding the changes in PayPal’s agreements, your own policies or e-commerce efforts, please do not hesitate to contact us at: (203) 307-2665 or info@SmartedgeLawGroup.com