On April 9, PayPal Holdings Inc. (“PayPal”) issued a regulatory filing indicating that it may soon face a lawsuit from the Consumer Financial Protection Bureau.  The CFPB is targeting the activities of PayPal’s payments service, which lets consumers buy products before paying for them.  In August 2014 and January 2015, the CFPB requested documents and information related to the acquisition, management, and operation of its PayPal Credit products.  The agency also sought information about PayPal’s online credit services and advertising, as well as how its loans originate, how it acquires customers, and how it collects debts.  According to the filing, the CFPB’s Civil Investigation Demand (“CID”) stated they could lead to an enforcement action and consent orders resulting in legal fees, fines, penalties, and other substantial costs.

“We are cooperating with the CFPB in connection with the CIDs and exploring whether we may be able to resolve these inquiries,” representatives of PayPal said.  “Resolution of these inquiries could require us to make monetary payments to certain customers, pay fines and/or change the manner in which we operate the PayPal Credit products, which could adversely affect our financial results and results of operations.”

Previously, the CFPB had made similar requests regarding PayPal’s Bill Me Later® service, according to securities documents filed by its parent, eBay, in October 2013.  eBay was accused of federal antitrust violations with the acquisition of Bill Me Later by consumers who claimed that the company utilized restrictive payment methods.