Consumer complaint received 2022-01-02
Company: SYNCHRONY FINANCIAL
State: NY
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Problem when making payments
Sub-issue: Problem during payment process

Complaint:
I suspect that PayPal Credit may be culpable of predatory lending practices. 

I have a PayPal credit account and have utilized it since the days it was known as " Pay Me Later ''. I utilize this account often for online purchases because of the advertised " Deferred Interest '' promotional offers on purchases of {$99.00} or more. Sometimes I have three or more of these promotional balances overlapping within a 4-8 month period because it is convenient.

In addition to that, I also take advantage of another " Easy Payment '' program which PayPal offers for large purchases of {$2000.00} or more. These programs require a monthly minimum payment. 

The " Deferred Interest '' promotions are structured such that interest begins accruing as of the date of the purchase. If any portion of a purchase promotional balance is not paid within the promotional term, the total accrued interest to date is charged to the consumer. 

The " Easy Payment '' program on the other hand, is a 0 % interest for a number of months as long as it is paid in full within the term and that you never miss the monthly minimum payment. 

I have attached a screenshot of a table listing my current promotions and easy payment balances as of XX/XX/XXXX ( see attached documents ) As you can see from the attached documentation, I have 4 deferred interest balances all due to mature between XX/XX/XXXX and XX/XX/XXXX. These balances have accrued interest as of the date of the purchase. 

I also have 2 Easy Payment balances due to mature in XXXX of XXXX - these were 24-month 0 % interest promotions. They remain 0 % interest promos as long as the minimum payment is made every month. 

Based on the above table, I have calculated the minimum bi-weekly payment required to ensure that I pay off the balances, in full, before the payoff date, thereby not incurring any accrued interest and/or penalties. I have consistently made bi-weekly payments. 

Unfortunately, PayPals default payment allocation method is such that if a consumer has concurrent " Deferred Promotional '' balances and " Easy Payment '' balances, then the entirety of each payment is always applied to the " Easy Payment '' balances and NO portion of the payment is applied to any other balance until the " Easy Payment '' balances are fully paid off. 

That is, unless the consumer contacts PayPals customer support and asks to have payments re-allocated as per the consumer 's best interest. I have done this several times over the past 2 months, but the requests have not yet been fulfilled and my on-going payments continue to be fully allocated to Easy Payment balances, whilst no portion of my payments have been allocated to any of my deferred interest balances. Customer support claims that payment re-allocation requests take 1 - 2 billing cycles to process. You can see this is evident from the chat with customer support as well as my statements in which one can see that payments are not being allocated at all to deferred interest balances ( see docs attached ).

PayPal does not provide an option to set the preferred allocation method that best suits the consumer.

This creates several problems : 1. The unsuspecting consumer, who makes multiple payments as I do every two weeks, may be unaware of the fact that their deferred interest balances do not decrease while they continue to accrue interest. 

2. Payment allocation requests take a very long time to fulfil, meanwhile, interest on the deferred promotional balances continues to accrue. 

3. All of this puts the onus on the consumer to have to contact PayPal Customer support, continuously, to ensure that they are doing their job and in a timely fashion. 

4. If an unwitting consumer does not continuously contact PayPal to ensure they are doing their job in a timely fashion, the consumer will be charged accrued interest. 

Put this all together and it is easy to see how this might be construed as a predatory lending practice.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation