The Polish competition watchdog UOKiK has fined US-based financial technology company PayPal PLN106.6m ($27.26m) for using prohibited clauses in its user agreements.

UOKiK announced the fine after completing proceedings against PayPal, which started in November 2022, concerning three provisions of the company’s user contract.

The three provisions include a list of prohibited actions, a list of sanctions, and a ban on using an account when it is either blocked or suspended.

PayPal provides online payment service that enables online payments worldwide and serves as an electronic wallet integrated with a bank account.

In its user agreement, PayPal has questionable clauses containing 34 prohibited activities for users and a catalogue of sample sanctions.

According to its provisions, a user must not violate any law, statute, ordinance, or regulation, which could end up with unspecified sanctions and can be punished even for attempting to use a blocked account.

UOKiK President Tomasz Chróstny said: “The nature of the violations is unprecedented. For a consumer, using PayPal’s services under the disputed clauses is unpredictable. PayPal’s clauses are generic, ambiguous and incomprehensible.

“When reading these provisions, a consumer cannot predict which of their actions may be considered prohibited, or what sanctions may be imposed on them by the entrepreneur.

“As a result, PayPal has unlimited discretion to decide whether a user has committed a prohibited act and what punishment he or she will face for it, which could be, for example, the blocking of money in the account.”

According to UOKiK, the contract’s extensive list of sanctioned actions, which were not linked to specific violations, rendered PayPal’s decisions arbitrary.

For example, PayPal holds the right to block a user’s funds at any time, at its discretion, in any amount and for an indefinite duration.

In addition, PayPal could impose multiple sanctions on a single consumer, requiring a payment of $2,500 or more, abruptly closing their account without notice, and denying future services.

According to the UOKiK, PayPal’s terms and conditions could potentially leave consumers unaware of actions deemed prohibited by the company, while they are unable to anticipate the sanctions that could be applied to them.

As a result, the customers could be deprived of access to the money stored in the PayPal account for an indefinite period.

UOKiK said that the abusive clauses should be treated as if they have never been included in the agreements.

Furthermore, the decision by UOKiK is not final and the company can appeal to the court.