Bill Me Later Faces Lawsuit Over High Interest Rates
January 25, 2010 — Bill Me Later, a subsidy of eBay Inc., is facing a class action lawsuit in California over claims that Bill Me Later is using a middleman to work around consumer protection laws and unfairly raise interest rates. The lawsuit seeks refunds of unjust fees and cancellation of loans for Bill Me Later customers in California. It also asks Bill Me Later and eBay to pay damages to plaintiffs that participate in the lawsuit equal to three times the interest charged.
Bill Me Later is an online payment processor used by ecommerce retailers. During a purchase, customers can choose to pay through Bill Me Later, where they undergo an instant credit check. If approved, Bill Me Later assumes the cost of the purchase and charges the customer like a credit card company would.
Lawsuit Argues Bill Me Later Evades Consumer Protection Laws
Since Bill Me Later is not a chartered bank or financial institution, the lawsuit argues they are not subject to the same consumer protection laws limiting interest rates and penalty fees. In the transaction, CIT bank is the initial lender when a consumer uses Bill Me Later; CIT then immediately sells the loan to Bill Me Later. That is the extent of CIT bank’s involvement–Bill Me Later is responsible for the approval of the purchase, controls the interest rate, fee rates and is responsible for the loan if the consumer defaults. The lawsuit argues that the setup between CIT and Bill Me Later is nothing more than a scheme to evade consumer protection laws.
A class action lawsuit against Bill Me Later has been filed in California. If you have utilized Bill Me Later’s services and been subject to outrageous interest rates and fees, we encourage you to contact us and discuss your legal options in joining this class action.