SAN JOSE, Calif.—PayPal has been hit with a consumer antitrust lawsuit in federal court here for allegedly fashioning agreements with e-commerce merchants that artificially maintain high transaction fees.
According to Reuters, the prospective class-action lawsuit from two consumers in California and Georgia alleged PayPal's contracts bar merchants from using price incentives to steer consumers to potentially more cost-effective payment options, Reuters said.
The lawsuit said PayPal, which owns Venmo, imposes the highest transaction fees among payment processors.
The case is the first ever to accuse PayPal of violating U.S. competition law through its "anti-steering" rules, said Steve Berman, one of the plaintiffs' lawyers leading the case, Reuters said.
Seeing Behind the Veil
In a statement, Berman said, "If consumers were allowed to see behind PayPal's pricing veil, they would see a clear and distinct difference between using PayPal and Venmo to complete their transactions and using its competitors."
PayPal responded in a statement to Reuters that is reviewing the lawsuit, adding, "PayPal continues to put our customers first in everything that we do, and we take this responsibility seriously."
The lawsuit seeks unspecified monetary damages and an injunction against alleged anticompetitive practices, Reuters said.
PayPal has more than 430-million active accounts and processes 41 million transactions daily, according to the complaint.
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