PayPal backs down automatic “opt-in” for users to receive robotcalls

PayPal yesterday backed down over a controversial new policy that would have automatically "opted in" its users to receive robocalls and text messages from the company.

The online payments company angered users, lawmakers and federal regulators on 11 June when it said it would start contacting customers with "autodialed or prerecorded calls and text messages" even if they had not given PayPal permission or even if they never gave PayPal their phone numbers.

The only recourse for PayPal's 165 million registered users against the policy that was to have come in force tomorrow would have been to stop using PayPal.

Objections to the move came from consumer activists and the Federal Communications Commission, and after meeting with the chief of the FCC's enforcement bureau, PayPal relented yesterday.

"We value our relationship with our customers and work hard to communicate clearly. Recently, however, we did not live up to our own standards," Louise Pentland, PayPal's new general counsel, said in a blog post yesterday.

In an attempt to "clarify" matters, Pentland said PayPal would not use "autodialed or pre-recorded calls or texts to contact our customers for marketing purposes without prior express written consent."

She added, one could opt out without having to quit the company.

PayPal would tweak the agreement once again to make it clear just when it would, more importantly, when it would not, send a recorded message to users.

The only times the firm would robocall was when it needed to collect debt, warn users about shady activity or tackle fraud cases. Unless users gave explicit consent, they would not have to deal with marketing calls and the permission could be reversed at any point.

According to commentators, it was a sensible gesture, and PayPal was also trying to prevent a thorny situation from getting worse. The FCC would have objected as the terms of service violated a ban on robotic telemarketing and the step would also likely help keep PayPal on the regulator's right side.