eBay, PayPal asked to explain robocall policies

The soon-to-be-split eBay and PayPal need to answer for changes they're making to their user agreements, according to the New York state attorney general's office.

The office of New York Attorney General Eric Schneiderman has issued a letter to eBay and PayPal requesting more information on the companies' proposed modifications to their user agreements. Those modifications would allow eBay and PayPal to use "autodialed or prerecorded calls or text messages" to contact their users. The communication could be used to collect debts, seek opinions or answers to surveys, or offer promotions. eBay's new policy will take effect on Monday; PayPal will implement its changes on July 1.

The modifications, which were announced earlier this month on the companies' websites and in e-mails to users, quickly caught the attention of critics who grew concerned that the policies would allow eBay and PayPal to call users at will and without recourse. The policies on the companies' websites mention no way of opting out of the program and would include robocalls, or automated phone messages that turn on as soon as a person answers their phone.

PayPal and eBay are among the most prominent companies in the e-commerce space. With over 157 million registered users, eBay has long been a destination for people to buy and sell goods with one another. PayPal, meanwhile, has continued to grow its digital-payments business. The company, which has 165 million users, tallied $2.1 billion in revenue in the first quarter of 2015 and registered 1.1 billion payments during the period, up 22 percent year over year.

PayPal, which is still owned by eBay, is set to be spun off into a separate company in the third quarter. The move has been celebrated by eBay investors, including activist investor Carl Icahn, who had argued that the digital-payments platform has been held back by the slower-growing eBay. When PayPal is spun off, "="" on="" the="" nasdaq"="" shortcode="link" asset-type="article" uuid="cada3b03-51a6-463e-a9f7-b39e4b56e869" slug="paypal-goes-back-in-time-with-pypl-ticker-symbol" link-text="it will trade under its original ticker " section="news" title="PayPal goes back in time with 'PYPL' ticker symbol" edition="us" data-key="link_bulk_key" api="{"id":"cada3b03-51a6-463e-a9f7-b39e4b56e869","slug":"paypal-goes-back-in-time-with-pypl-ticker-symbol","contentType":null,"edition":"us","topic":{"slug":"online"},"metaData":{"typeTitle":null,"hubTopicPathString":"Tech^Services and Software^Online","reviewType":null},"section":"news"}"> .

In an attempt to quell unrest, PayPal last week issued a blog post attempting to explain its rationale behind the modification to its user agreement. The company's general counsel, senior vice president and secretary, Louise Pentland, wrote that PayPal has "no intention of harassing you." Pentland added that the use of robocalling is simply about efficiency and not annoyance.

"In reaching out to you for account service purposes, such as fraud alerts, we occasionally use technologies that allow us to contact you efficiently," Pentland wrote.

Perhaps most importantly to users, Pentland also said that users can opt out of the program by contacting PayPal support via e-mail or phone.

Still, it wasn't enough for the New York attorney general's office. In an identical letter sent to both PayPal and eBay, the attorney general's Internet Bureau Chief Kathleen McGee expressed concern that the modifications may violate the US Telephone Consumer Protection Act, protecting against unwanted solicitor phone calls, as well as the Fair Debt Collections Practices Act. McGee also questioned whether the companies' users have even "consented" to their phone numbers being contacted by eBay and PayPal.

McGee's letter (PDF), which was obtained by The Wall Street Journal, includes several questions her office wants answered by June 19, including why the companies are making the changes and how they envision using the policy.

"Customers must accept automated marketing calls, emails and text messages or close their account before June 1, 2015," McGee wrote. "Given eBay's dominant market position, it is unclear whether consumers really have a choice at all."

In a statement to CNET on Thursday, a spokeswoman said that eBay has "received the letter of inquiry from the New York State Attorney General's office and look[s] forward to responding to their questions."

PayPal did not immediately respond to a request for comment.