EBay’s PayPal May Face U.S. Lawsuit Over ‘Bill Me Later’ Service

EBay Inc.’s payments division PayPal may face a lawsuit from the U.S. Consumer Financial Protection Bureau over some of the unit’s lending practices.

The agency began requesting information from EBay and its subsidiaries in August 2013 regarding PayPal Credit products that let users buy items without immediately paying for them, including Bill Me Later, the company disclosed in a regulatory filing Thursday.

The investigation could lead to a lawsuit against EBay as soon as the second quarter. Potential outcomes include a settlement requiring the company to change its business practices or undisclosed fines, penalties, legal fees and payments to customers, the San Jose, California company said.

“We are cooperating with the CFPB ... and are engaging in settlement discussions,” EBay said in the filing, which pertained to its pending spinoff of PayPal into a stand-alone company.

Bill Me Later is a service offered by PayPal for shoppers to buy merchandise on credit. The PayPal unit makes loans through a bank that are then purchased and managed by EBay.

“We take consumer protection very seriously and we are cooperating with the CFPB,” said Amanda Miller, a spokeswoman for EBay.

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