PayPal pays $5.2 million to settle lawsuits

EBay's PayPal payment division Thursday said it will pay $3.5 million to consumers and $1.7 million to 28 states in settlements for two different actions regarding its notification of users regarding their rights.

The online payment company will establish a $3.5 million settlement fund to conclude a class-action lawsuit filed in U.S. District Court in Brooklyn, New York, in 2005. The settlement is still pending court approval. Consumers filed the suit on the basis that PayPal did not make clear its policies on certain types of transactions, the company said.

The company will also pay $1.7 million to the attorneys general of 28 states to settle suits there, stemming from similar investigations and complaints regarding its consumer protection and notification policies. The states are: Alabama, Arizona, California, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Vermont, Washington, and West Virginia.

Under the terms of both settlements, PayPal is not required to admit guilt or wrongdoing, but must improve the policies and notification procedures in question.

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