Remember that PayPal saga from last week? You know, the one involving PayPal’s new user agreement which gave the company carte blanche to robocall and autotext users for pretty much any reason under the sun, including surveys and promotions? Well, now the FCC is getting involved and they don’t like what they see.

In a letter sent to PayPal’s general counsel, and originally spotted by The Consumerist, the FCC writes that the company’s new user agreement “may violate federal laws governing the use of autodialed, prerecorded, and artificial voice calls, including text messages.” Specifically, the FCC notes that the new user agreement may run afoul of the Telephone Consumer Protection Act.

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Compounding matters is the whole issue of how users can opt out of receiving such calls and texts. While PayPal told us that they will “honor customers’ requests to decline to receive auto-dialed or prerecorded calls,” how to go about that process hasn’t been communicated clearly, if at all.

The FCC’s letter reads in part:

If PayPal plans to make autodialed, prerecorded, or artificial voice calls or text messages
to its customers, please be aware that federal law places strict limits on such communications. For more than two decades, federal lawmakers have sought to protect consumers from harassing, intrusive, and unwanted calls and text messages. The FCC recognizes that “automated or prerecorded telephone calls [are] a greater nuisance and invasion of privacy than live solicitation calls,” and that “such calls can be costly and inconvenient” for consumers.

The FCC further informs PayPal that if they want the freedom to make prerecorded calls, whether they be telemarketing calls or not, they must first obtain prior express written consent from any and all recipients.

Per FCC regulations, prior express written consent must be in writing and bear the signature of the person who will receive the calls/texts. More importantly, a company can not make signing such an agreement as a “condition of purchasing any property, goods, or services.”

PayPal’s user agreement in this regard falls completely flat.

In fact, the agreement states in bolded capital letters: IF YOU DO NOT AGREE TO THE AMENDED USER AGREEMENT, PRIVACY POLICY OR ACCEPTABLE USE POLICY, YOU MAY CLOSE YOUR ACCOUNT BEFORE JULY 1, 2015 AND YOU WILL NOT BE BOUND BY THE AMENDED TERMS.

So how is this going to play out?

Well it seems that PayPal will have to revise their user agreement lest they continue to raise the ire of authorities and fork over a lot of money in fines.

The FCC letter informs PayPal that it may be subject of penalties of up to $16,000 for each improper call or text message.

You might also recall that PayPal’s new user agreement allows the company to contact users at any phone number they manage to obtain. The FCC also finds this problematic because even in cases where prior written consent is given, such consent is only applicable to a specified phone number.

The FCC notes:

A blanket User Agreement that purports to apply to “any telephone number that [consumers] have provided us or that we have otherwise obtained” does not meet the level of specificity required by law. Many consumers have more than one telephone line. Consumers have the right to choose on which line(s) they wish to receive telemarketing or advertising calls, if they elect to receive such calls at all.

We’ve reached out to PayPal for comment and will provide updates as they come in.

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