BBB National Programs Archive

NAD Finds Certain PayPal Advertising Claims Substantiated But Recommends It Discontinue Its “No Purchase Fee” Claim

New York, NY – Jan. 11, 2019 – As part of its routine monitoring program, NAD challenged claims made by PayPal, Inc. on its PayPal Prepaid Mastercard website. NAD found certain claims substantiated but recommended that its “no purchase fee” claim be modified or discontinued.

NAD is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus.

The challenged claims included:

  • “no purchase fee”.
  • “no cost direct deposit”
  • “227 million active PayPal accounts.”
  • The implied claim that there are 227 million customers of the PayPal Prepaid Mastercard

Following NAD’s review of the challenged claims, NAD concluded that, in the context of the website, PayPal’s true statement that there are 227 million active PayPal accounts did not reasonably convey the message that there are 227 million customers of the PayPal Prepaid Mastercard.

NAD also concluded that the claim, “no cost direct deposit” did not convey any misleading message about the cost of any other method of adding money to the PayPal Prepaid Mastercard. NAD found persuasive the guidance of the Consumer Financial Protection Bureau (“CFPB”), which stated that it is common for prepaid cards to charge no fees for direct deposit but to charge fees to consumers who reload their cards via other means.

NAD, however, was concerned about the advertiser’s “no purchase fee” message, in light of the fact that PayPal charges a monthly fee, which is listed in the “terms and conditions” as a purchase fee. On this point, NAD noted that the CFPB tells consumers that cards often charge a per-transaction fee or a purchase fee. Consequently, NAD recommended that the advertiser either discontinue its “no purchase fee” claim or modify it to disclose, clearly and conspicuously and in close proximity to the main claim, the fees associated with the initial use of the PayPal prepaid card.

In its advertiser’s statement, PayPal stated that although it disagreed with NAD’s findings regarding the “no purchase fee” claim, it will comply with NAD’s recommendations. PayPal was pleased that NAD concluded that the claims on its website that the prepaid card program offers “no cost direct deposit” and connectivity with “227 million active PayPal accounts” are accurate and substantiated as presented.

Note: A recommendation by NAD to modify or discontinue a claim is not a finding of wrongdoing and an advertiser’s voluntary discontinuance or modification of claims should not be construed as an admission of impropriety. It is the policy of NAD not to endorse any company, product, or service. Decisions finding that advertising claims have been substantiated should not be construed as endorsements.