Consumer complaint received 2017-11-17
Product: Payday loan, title loan, or personal loan — Personal line of credit
Issue: Charged fees or interest you didn't expect — 
Company: Bread Financial Holdings, Inc. (WV)

Information pulled from attached memo : I am writing in an effort to correct the predatory lending and payment application practices from PayPal Credit associated with my account. On XXXX XXXX, XXXX, I purchased a vacation online for {$2600.00} under a promotion of no payments and no interest for 6 months, which allowed me until XXXX XXXX, XXXX to pay the balance in full and avoid all interest and minimum payment requirements. At the time, I had two outstanding items on my XXXX account, another promotional item under the same terms in the amount of {$1800.00}, which was paid off on XXXX XXXX, XXXX just before the new purchase was made, and a {$75.00} purchase that was made on XXXX XXXX, XXXX. On XXXX XXXX, XXXX, I submitted a payment in the amount of {$75.00} to satisfy the single outstanding item associated with my balance, which would leave me with zero due until XXXX XXXX, XXXX under the terms of the promotion. There was no option for me using my payment method to directly apply my payment to a particular area, so a general consumer, as I did, would assume that the payment would be applied to the outstanding balance due, not any items that do not require a payment, such as the trip that was purchased under promotional terms. It turns out, however, that PayPal automatically applies the payment to any promotional purchase before applying the payment to the outstanding balance. As a result, my {$75.00} payment that was intended to satisfy my outstanding balance was instead applied to my promotional item, resulting in a minimum payment of {$27.00} that went unpaid, as I assumed that the non-promotional item was paid off and there would be no payment required. To summarize, I bought one promotional item and one nonpromotional item, made a payment in good faith before the due date to satisfy the nonpromotional item, and the payment was misapplied in a way that PayPal left me with an outstanding balance and minimum payment requirement that I assumed had been already satisfied. 

Ten days following the incorrect minimum payment coming due, I reviewed my account and noticed an assessment of late fees and interest, as well as a larger minimum payment. I immediately called PayPal to correct the issue, I was told by a representative that the easiest thing for me to do was to just pay the balance required, even though this balance is outstanding and fees were assessed due to an error on the payment allocation. I was then told that a request could be made by the representative to the back office to solve the issue. I also sent a message via the PayPal Credit online portal in order to ensure someone received this request. I had received no further communication from PayPal and assumed that the issue was corrected. 

This morning, I reviewed my account again, and discovered that the issue not only went uncorrected, but that additional late fees and interest were added to my account. Again, I immediately contacted PayPal. The representative once again was able to confirm that the issue was due to PayPal misapplying the {$75.00} payment, however she told me that the request to correctly apply the payment was denied as company policy requires that the customer specify where they want the payment allocated at the time of payment even though there is no option within the online portal to do so. As a result, I am left with an outstanding balance for an item already paid off for {$75.00}, as well as fees and interest totaling {$69.00}. 

As a former bank examiner as well as a current banker, reallocating a payment is something that is a very quick and easy task, something that we do every day, so therefore it is unfair and deceptive for a company to deliberately apply payments in the way that harms the consumer so that they assume their payments will satisfy immediate balances due when they in fact automatically apply to items that do not require payment for months in the future. The company takes this a step further by refusing to correct misapplied payments if not requested immediately, which they make very difficult to do, and impossible to do online ( a reasonable consumer would assume that the company would make this an option online if they will require it since their business is done primarily via the internet ). The representative I spoke with today, even though she assured me that the issue was directly caused by a misallocated payment, also refused to remove any fees unless a payment was provided, which does not make sense considering there should not be a payment required at this time.