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PayPal dials back on robocalling

The digital payments firm says it didn't live up to its own standards when it updated its user agreement with a confusing and controversial policy on autodialed calls and texts.

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PayPal is clarifying its robocalling policy with plenty more details on why it would contact users. Getty Images

PayPal said Monday it will make a handful of fixes to its user agreement, looking to quell a controversy that sparked over its new robocalling policy.

Earlier this month, the digital payments company faced a torrent of criticism for adding new language into its user agreement that people feared could give it the broad ability to blanket users with autodialed marketing calls and texts. The Federal Communications Commission and the office of New York Attorney General Eric Schneiderman quickly weighed in, calling on PayPal and its parent company, eBay, to provide more information on their robocalling policies.

On Monday, Louise Pentland, PayPal's general counsel, offered an apology of sorts, saying her company "didn't live up to our own standards" of clearly communicating with its customers and conceded that the new policy "caused confusion and concern."

The spat had come at a delicate time for both PayPal and eBay, which are both trying to present themselves in the best light ahead of a planned split into two separate companies in late July. Any criticisms like the robocall issue could become costly distractions as they head into the split.

PayPal's fleshed-out user agreement new language, which goes into effect Wednesday, clarifies that it will use automated calls and texts primarily for fraud issues, account notices and collection of debts owed to PayPal. Additionally, the new user agreement will state that PayPal won't use pre-recorded calls or texts for marketing purposes without prior written consent, and that people can continue to use its service without needing to consent to such robocalls and robotexts.

That provides much more information than the current policy, which simply says PayPal can send users robocalls or texts, without specifying reasons and without spelling out that users can opt out.

eBay already had a policy on robocalling in place and updated it with some additional language this year. However, it has provided more information on the reasons why it would reach out to customers, which may have helped it avoid some of the FCC concerns PayPal faced.

PayPal's changes should help placate the FCC, which earlier this month raised issue with PayPal's new user agreement, particularly the fact that it appeared PayPal may have been requiring consumers to consent to autodialed telemarketing calls as a condition of service -- something the FCC directly prohibits.

The FCC on Monday called PayPal's changes "significant and welcome improvements."

"The changes to PayPal's user agreement," Travis LeBlanc, FCC's Enforcement Bureau chief, said in a statement, "recognize that its customers are not required to consent to unwanted robocalls or robotexts."