|
|
 | | | |
- close
- close
- close
- close
EBAY » Topics » If PayPal was found to be subject to or in violation of any U.S. laws or regulations governing banking, money transmission, or electronic funds transfers, it could be subject to liability and forced to change its business practices.This excerpt taken from the EBAY 10-Q filed Oct 29, 2007. If
PayPal was found to be subject to or in violation of any U.S.
laws or regulations governing banking, money transmission, or
electronic funds transfers, it could be subject to liability and
forced to change its business practices.
A number of U.S. states have enacted legislation regulating
money transmitters. To date, PayPal has obtained licenses in 41
of these jurisdictions and interpretations in six states that
licensing is not required under their existing statutes. PayPal
is applying for licenses in two additional states. As a licensed
money transmitter, PayPal is subject to bonding requirements,
restrictions on its investment of customer funds, reporting
requirements, and inspection by state regulatory agencies. In
July 2005, PayPal entered into a settlement agreement and agreed
to pay $225,000 to the California Department of Financial
Institutions in connection with alleged violations of the
California Financial Code relating to the use of a receipt form
for international payments that had not been pre-approved by the
Department, and incomplete reporting to the Department. If
PayPal was found to be in violation of other money services laws
or regulations, PayPal could be subject to liability, forced to
cease doing business with residents of certain states, or forced
to change its business practices. Any change to PayPal’s
business practices that makes the service less attractive to
customers or prohibits its use by residents of a particular
jurisdiction could decrease the velocity of trade on eBay, which
would further harm our business. Even if PayPal is not forced to
change its business practices, it could be required to obtain
additional licenses or regulatory approvals that could impose a
substantial cost on PayPal.
Although there have been no definitive interpretations to date,
PayPal has assumed that its service is subject to the Electronic
Fund Transfer Act and Regulation E of the Federal
Reserve Board. As a result, among other things, PayPal must
provide advance disclosure of changes to its service, follow
specified error resolution procedures and reimburse consumers
for losses above $50 from transactions not authorized by the
consumer. PayPal currently voluntarily reimburses consumers for
all financial losses from transactions not authorized by the
consumer, not just losses above $50. PayPal seeks to pass most
of these losses on to the relevant merchants, but PayPal incurs
losses if the merchant does not have sufficient funds in their
PayPal account. In addition, PayPal is subject to the financial
Table of Contents
privacy provisions of the Gramm-Leach-Bliley Act, state
financial privacy laws, and related regulations. As a result,
some customer financial information that PayPal receives is
subject to limitations on reuse and disclosure. Existing and
potential future privacy laws may limit PayPal’s ability to
develop new products and services that make use of data gathered
through its service. The provisions of these laws and related
regulations are complicated. Even technical violations of these
laws can result in penalties of up to $1,000 for each
non-compliant transaction. PayPal processed an average of
approximately 1.9 million transactions per day during the
quarter ended September 30, 2007, and any violations could
expose PayPal to significant liability. Any negative change in
the public’s perception of PayPal’s compliance with
privacy laws and policies could also negatively impact
PayPal’s business.
This excerpt taken from the EBAY 10-Q filed Jul 27, 2007. If
PayPal was found to be subject to or in violation of any U.S.
laws or regulations governing banking, money transmission, or
electronic funds transfers, it could be subject to liability and
forced to change its business practices.
A number of U.S. states have enacted legislation regulating
money transmitters. To date, PayPal has obtained licenses in 37
of these jurisdictions and interpretations in nine states that
licensing is not required under their existing statutes. PayPal
is applying for licenses in seven additional states (including
some states that previously provided favorable interpretations).
As a licensed money transmitter, PayPal is subject to bonding
requirements, restrictions on its investment of customer funds,
reporting requirements, and inspection by state regulatory
agencies. In July 2005, PayPal entered into a settlement
agreement and agreed to pay $225,000 to the California
Department of Financial Institutions in connection with alleged
violations of the California Financial Code relating to the use
of a receipt form for international payments that had not been
pre-approved by the Department, and incomplete reporting to the
Department. If PayPal was found to be in violation of other
money services laws or regulations, PayPal could be subject to
liability, forced to cease doing business with residents of
certain states, or forced to change its business practices. Any
change to PayPal’s business practices that makes the
service less attractive to customers or prohibits its use by
residents of a particular jurisdiction could decrease the
velocity of trade on eBay, which would further harm our
business. Even if PayPal is not forced to change its business
practices, it could be required to obtain additional licenses or
regulatory approvals that could impose a substantial cost on
PayPal.
We believe that the licensing or approval requirements of the
U.S. Office of the Comptroller of the Currency, the Federal
Reserve Board, and other federal or state agencies that regulate
banks, bank holding companies, or other types of providers of
e-commerce
services do not apply to PayPal, except for the money
transmitter licenses mentioned above. However, one or more
states could conclude that PayPal is engaged in an unauthorized
banking business. If PayPal is found to be engaged in an
unauthorized banking business in one or more states, it might be
subject to monetary penalties and adverse publicity and might be
required to cease doing business with residents of those states
or could be subject to fines and penalties. The need to comply
with state laws prohibiting unauthorized
Table of Contents
banking activities could also limit PayPal’s ability to
enhance its services in the future. Any change to PayPal’s
business practices that makes the service less attractive to
customers or prohibits its use by residents of a particular
jurisdiction could decrease the velocity of trade on eBay, which
would further harm our business.
Although there have been no definitive interpretations to date,
PayPal has assumed that its service is subject to the Electronic
Fund Transfer Act and Regulation E of the Federal
Reserve Board. As a result, among other things, PayPal must
provide advance disclosure of changes to its service, follow
specified error resolution procedures and reimburse consumers
for losses above $50 from transactions not authorized by the
consumer. PayPal currently voluntarily reimburses consumers for
all financial losses from transactions not authorized by the
consumer, not just losses above $50. PayPal seeks to pass most
of these losses on to the relevant merchants, but PayPal incurs
losses if the merchant does not have sufficient funds in their
PayPal account. In addition, PayPal is subject to the financial
privacy provisions of the Gramm-Leach-Bliley Act, state
financial privacy laws, and related regulations. As a result,
some customer financial information that PayPal receives is
subject to limitations on reuse and disclosure. Existing and
potential future privacy laws may limit PayPal’s ability to
develop new products and services that make use of data gathered
through its service. The provisions of these laws and related
regulations are complicated. Even technical violations of these
laws can result in penalties of up to $1,000 for each
non-compliant transaction. PayPal processed an average of
approximately 1.9 million transactions per day during the
quarter ended June 30, 2007, and any violations could
expose PayPal to significant liability. Any negative change in
the public’s perception of PayPal’s compliance with
privacy laws and policies could also negatively impact
PayPal’s business.
This excerpt taken from the EBAY 10-Q filed Apr 25, 2007. If
PayPal was found to be subject to or in violation of any
U.S. laws or regulations governing banking, money
transmission, or electronic funds transfers, it could be subject
to liability and forced to change its business
practices.
A number of U.S. states have enacted legislation regulating
money transmitters. To date, PayPal has obtained licenses in 36
of these jurisdictions and interpretations in nine states that
licensing is not required under their existing statutes. As a
licensed money transmitter, PayPal is subject to bonding
requirements, restrictions on its investment of customer funds,
reporting requirements, and inspection by state regulatory
agencies. In July 2005, PayPal entered into a settlement
agreement and agreed to pay $225,000 to the California
Department of Financial Institutions in connection with alleged
violations of the California Financial Code relating to the use
of a receipt form for international payments that had not been
pre-approved by the Department, and incomplete reporting to the
Department. If PayPal was found to be in violation of other
money services laws or regulations, PayPal could be subject to
liability, forced to cease doing business with residents of
certain states, or forced to change its business practices. Any
change to PayPal’s business practices that makes the
service less attractive to customers or prohibits its use by
residents of a particular jurisdiction could decrease the
velocity of trade on eBay, which would further harm our
business. Even if PayPal is not forced to change its business
practices, it could be required to obtain additional licenses or
regulatory approvals that could impose a substantial cost on
PayPal.
We believe that the licensing or approval requirements of the
U.S. Office of the Comptroller of the Currency, the Federal
Reserve Board, and other federal or state agencies that regulate
banks, bank holding companies, or other types of providers of
e-commerce
services do not apply to PayPal, except for certain money
transmitter licenses mentioned above. However, one or more
states may conclude that PayPal is engaged in an unauthorized
banking business. If PayPal is found to be engaged in an
unauthorized banking business in one or more states, it might be
subject to monetary penalties and adverse publicity and might be
required to cease doing business with residents of those states
or could be subject to fines and penalties. The need to comply
with state laws prohibiting unauthorized banking activities
could also limit PayPal’s ability to enhance its services
in the future. Any change to PayPal’s business practices
that makes the service less attractive to customers or prohibits
its use by residents of a particular jurisdiction could decrease
the velocity of trade on eBay, which would further harm our
business.
Although there have been no definitive interpretations to date,
PayPal has assumed that its service is subject to the Electronic
Fund Transfer Act and Regulation E of the Federal
Reserve Board. As a result, among other things, PayPal must
provide advance disclosure of changes to its service, follow
specified error resolution procedures and absorb losses above
$50 from transactions not authorized by the consumer. In
addition, PayPal is subject to the financial privacy provisions
of the Gramm-Leach-Bliley Act, state financial privacy laws, and
related regulations. As a result, some customer financial
information that PayPal receives is subject to limitations on
reuse and disclosure. Existing and potential future privacy laws
may limit PayPal’s ability to develop new products and
services that make use of data gathered through its service. The
provisions of these laws and related regulations are
complicated, and PayPal does not have extensive experience in
complying with them. Even technical violations of these laws can
result in penalties of up to $1,000 for each non-compliant
transaction. PayPal processed an average of approximately
2.0 million transactions per day during the quarter ended
March 31, 2007, and any violations could
Table of Contents
expose PayPal to significant liability. Any negative change in
the public’s perception of PayPal’s compliance with
privacy laws and policies could also negatively impact
PayPal’s business.
| EXCERPTS ON THIS PAGE:
|
| |||||||
