Not upheld: irresponsible lending complaint against PayPal (Europe) S.a r.l Cie, S.C.A.

Decision detail

Summary

Miss I complained that PayPal irresponsibly lent to her by approving a £1,000 credit account in April 2021 and increasing the limit to £2,000 in January 2022, when she was unable to afford repayment. She argued the affordability checks were insufficient and that PayPal failed to provide support when she contacted them. PayPal rejected the complaint, stating they completed external credit checks and relied on Miss I's declared information showing sufficient disposable income. The ombudsman found the checks were proportionate given the modest amounts and Miss I's financial position at the time, with no indicators of financial difficulty. Evidence of missed payments only emerged in 2024, after both lending decisions, so PayPal could not reasonably have known of her struggles. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for 'borrower-focused' and 'proportionate' affordability assessments. For the initial £1,000 credit, the checks were proportionate given the modest amount, Miss I's salary, and absence of financial difficulty indicators. For the limit increase, PayPal had additional information about account management and confirmed no financial difficulty signs internally or externally. The ombudsman rejected the argument that an income and expenditure assessment was required, noting it was Miss I's responsibility to declare accurate figures. Evidence of payment difficulties only emerged in 2024, after both lending decisions, so PayPal could not reasonably have been aware of struggles at the time.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website