Not upheld: irresponsible lending and failure to support vulnerable customer complaint against PayPal UK Ltd

Decision detail

Summary

Ms B complained to PayPal UK Ltd about irresponsible lending for a PayPal Credit account approved in November 2023 with a £1,500 limit and failure to support her as a vulnerable customer. The account defaulted in August 2025 after experiencing payment difficulties. Ms B had declared employment on her application despite having lost her job, and PayPal conducted credit reference agency checks showing a 2% debt-to-income ratio and good credit history. The ombudsman found that PayPal's proportionate affordability checks were appropriate for a new customer with a modest credit limit and that PayPal could not be attributed knowledge of Ms B's job loss given her declaration of employment. Although the ombudsman acknowledged PayPal could have intervened earlier when multiple late payment fees accumulated in 2024, this did not render the initial lending decision irresponsible. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that PayPal conducted proportionate affordability checks appropriate for a new customer with a modest credit limit, including credit reference agency searches and self-declared income information. The ombudsman rejected the investigator's view that PayPal should have reviewed bank statements, noting this was not necessary at the initial application stage. While Ms B had lost her job before applying, she declared employment on the form, so PayPal could not be attributed knowledge of her actual circumstances. The ombudsman noted that Ms B's ordinary PayPal account had been managed satisfactorily and her bank statements showed sufficient funds to cover the credit facility. Although the ombudsman acknowledged PayPal could have intervened earlier when multiple late payment fees accumulated in 2024, this did not render the initial lending decision irresponsible. The ombudsman found no evidence of unfair treatment or breach of section 140A of the Consumer Credit Act 1974.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website