EBay, PayPal Face Criticism Over Robocall Policies

By Greg Bensinger 

New York state Attorney General Eric Schneiderman is raising concerns over new policies from eBay Inc. and its payments subsidiary PayPal that may give the firms leeway to blast users with so-called robocalls.

In separate letters Wednesday, the attorney general's office sought more information about the policies, which are part of eBay and PayPal's new user agreements, set to take effect on June 15 and July 1, respectively. The companies revised their policies ahead of a separation in this year's third quarter.

The agreements would give eBay and PayPal the right to use "autodialed or prerecorded calls and text messages" to collect debts, or send surveys or promotions.

As is customary with user agreements, there is no obvious way to opt out of that provision.

A PayPal spokeswoman said customers can choose not to receive autodialed or prerecorded messages, pointing to a June 5 blog post that says users can contact customer service by email or phone to opt out.

The attorney general is asking eBay and PayPal to answer a series of questions by next week, including explaining the rationale for their implementation, how the companies plan to use such robocalls and what opt-out options consumers have.

The PayPal spokeswoman said the company would work with Mr. Schneiderman's office to resolve its questions. "We strive to be as clear as possible with our customers," she said.

An eBay spokeswoman said the company would respond to the attorney general's questions.

The inquiry from New York state's top attorney casts a light on the proliferation of user agreements that can often include terms that are highly favorable for companies. Within user agreements, firms may seek to limit their liability for the use of their products or compel their customers to forgo class-action lawsuits, in addition to more standard legal language.

Generally, consumers must either accept a user agreement's terms or choose not to use the product or service.

Given the companies' "dominant market position in online payment systems, it is unclear whether consumers really have a choice at all," said Internet Bureau Chief Kathleen McGee in the letters. "It is also inconsistent with consumers' aversion to this invasive form of marketing."

She said the companies' new policies may run afoul of the Telephone Consumer Protection Act, which limits how corporations can target consumers with robocalls, including at what times they can be called and requires that they keep a do-not-call list of people who have opted out of such calls.

Under the terms of the TCPA, however, businesses are required only to obtain "written consent--on paper or through electronic means, including website forms" in order to make prerecorded calls, according to the Federal Communications Commission's website.

The FCC is considering a proposal that would allow consumers to be added to the do-not-call list with a verbal command, rather than paperwork and would give phone service providers the option of providing a call-blocking service to customers.

Write to Greg Bensinger at [e-mail]

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