PayPal said the Consumer Financial Protection Bureau has closed an investigation it began in 2020 into whether PayPal loans offered to students at for-profit universities violated federal regulations.
The San Jose-based payments company said it had previously received a civil investigative demand (CID) from the CFPB related to the marketing and use of PayPal Credit in connection with certain merchants that provide educational services.
"The CID requested the production of documents, written reports, and answers to written questions. We have been informed by the CFPB that this matter has been formally closed without action," PayPal said in a 10K filed Feb. 10 on its website.
The matter came to light in August 2020 when the
The Washington, D.C.-based consumer advocacy group cited more than 150 schools that advertised PayPal Credit as a preferred financing option for courses in areas such as makeup artistry and hypnosis, with interest rates four times the cost of the most expensive federal student loans.
The Student Borrower Protection Center also suggested in 2020 that PayPal was putting borrowers at risk with deferred-interest loans, and not for the first time. PayPal in 2015 agreed to pay a $10 million fine and refunded $15 million to consumers in response to a CFPB claim that PayPal had abusively charged users for six-month deferred-interest loans.
Stamford, Connecticut-based Synchrony Financial provides the credit line for PayPal Credit, according to regulatory filings.
PayPal said in 2020 that it was cutting off for-profit schools' access to its payment services, although the Student Borrower Protection Center early last year
The CFPB touched on this issue in a September 2022
"We remain extremely concerned about the use of expensive point-of-sale credit as a form of educational financing," said Ben Kaufman, director of research and investigations at the Student Borrower Protection Center. "We're well aware that PayPal previously claimed it would clean up its act in this arena, and certain problems continued."
