Not upheld: Irresponsible lending complaint against PayPal UK Ltd

Decision detail

Summary

Mr D complained that PayPal lent to him irresponsibly when issuing a credit card with an £850 limit in October 2019, claiming the firm should have known about his gambling addiction from his previous PayPal account history. PayPal declined the complaint, and the FOS investigator agreed that the checks were reasonable and proportionate. The ombudsman upheld this decision, finding that PayPal's verification of Mr D's income (£2,001-£2,500 monthly), expenses (£1-£1,000 monthly), and clean recent credit file provided sufficient basis for the lending decision. Although Mr D had previous difficulties with a PayPal account cleared in 2017, this was considered historic and not reflective of his current circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending complaints, requiring PayPal to carry out reasonable and proportionate checks to ensure sustainable repayment. For a modest £850 credit limit, the checks PayPal conducted (verifying income, checking credit file, assessing disposable income) were reasonable and proportionate. Mr D's declared income of £2,001-£2,500 with only £1-£1,000 in monthly expenses showed sufficient disposable income. Although Mr D had previous difficulties with a PayPal account in 2017, this was more than two years prior and could reasonably be considered historic given his current credit file status. The ombudsman found no evidence of unfair treatment in other respects.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website