Not upheld: irresponsible lending complaint against PayPal UK Ltd

Decision detail

Summary

Mrs T complained that PayPal irresponsibly provided her with a £2,000 revolving credit facility in August 2019, which she claimed was unaffordable and led to ongoing financial difficulty. PayPal had obtained information showing Mrs T earned £2,001-£2,500 monthly with expenses of no more than £1,000, and a credit search revealed no adverse information. The ombudsman found that PayPal's affordability checks were reasonable given the early stage of the relationship and the modest monthly repayments required, and that there was no evidence Mrs T's actual expenses were significantly higher than declared or that she could not afford the repayments. The complaint was not upheld, with the ombudsman noting that Mrs T's upheld overdraft complaint with another provider did not automatically mean this complaint should succeed, as overdrafts are different products subject to different regulatory oversight.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair to Mrs T. The ombudsman found that PayPal's checks were reasonable given the early stage of the lending relationship, the not especially high monthly repayments required, and the information obtained showing Mrs T had sufficient income to cover repayments after declared expenses. The ombudsman noted that even if PayPal needed to do more to verify actual committed living expenses, the information Mrs T subsequently provided did not show her actual expenditure was significantly higher than PayPal believed, or that she lacked sufficient funds for repayments. The fact that Mrs T's overdraft complaint with another provider was upheld did not automatically mean this complaint should be upheld, as the overdraft was a different product with different regulatory requirements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website