Consumer complaint received 2026-02-21 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Unexpected or other fees — 
Company: Paypal Holdings, Inc
State: CA

Complaint narrative:
1. Nature of the Problem I am filing this complaint against PayPal , Inc. for improperly classifying consumer retail purchase transactions under Merchant Category Code ( MCC ) XXXX ( XXXX/Non-Financial Institutions ) when submitting those transactions to the XXXX card network. This misclassification caused my credit card issuer, XXXX ( XXXX XXXX XXXX ), to automatically assess cash advance fees and immediate interest charges on what were straightforward purchases of goods from XXXX. I did not authorize, initiate, or request any cash advance in connection with these transactions. 
2. The Transactions The following four transactions were made through PayPal to XXXX XXXX XXXX XXXX XXXX XXXX XXXX ) using my XXXX XXXX XXXX XXXX ending in XXXX : XXXX. XX/XX/XXXX Transaction ID : XXXX {$120.00} ( split payment ) XXXX. XX/XX/XXXX Transaction ID : XXXX {$720.00} XXXX. XX/XX/XXXX Transaction ID : XXXX {$110.00} ( split payment ) XXXX. XX/XX/XXXX Transaction ID : XXXX {$0.00} ( split payment ) XXXX. Resulting Harm As a direct result of PayPal 's MCC XXXX coding, XXXX assessed the following charges : Cash advance transaction fee : {$56.00} ( XX/XX/XXXX ) Interest charged to standard advance : {$20.00} ( XX/XX/XXXX ) Interest charged to standard advance : {$19.00} ( XX/XX/XXXX ) Total documented damages : {$96.00}, with interest continuing to accrue. 
4. PayPal 's Role I have confirmed with XXXX in writing that these transactions arrived at their system coded under MCC XXXX. XXXX 's treatment of MCC XXXX transactions as cash advances is standard and consistent with XXXX network rules XXXX did not err. The MCC XXXX classification was assigned and transmitted by PayPal when it submitted these transactions to XXXX. PayPal operates as the payment processor and effectively as the merchant acquirer in this transaction chain. It determined actively or by systemic default to classify these retail purchase transactions under a quasi-cash MCC that predictably and automatically triggered cash advance treatment by card issuers. These transactions involved the purchase of physical goods from an XXXX merchant and had no cash-equivalent character. 
I also note that PayPal maintains an active promotional and commercial relationship with XXXX, hosting XXXX coupons on its own website. The classification of PayPal/XXXXXXXX purchase transactions as quasi-cash appears to be a systemic issue that may affect a large number of consumers. 
XXXX. PayPal 's Customer Support Failures I attempted to resolve this matter through PayPal 's customer support chat on multiple occasions. The responses I received were contradictory and inaccurate. One representative claimed only card issuers can provide MCC information. Another told me to contact XXXX because " they were the one who process the transaction as XXXX advance '' a factually incorrect statement, as merchants do not assign MCCs or determine cash advance classification. A third response implied PayPal has no knowledge of or responsibility for MCC classification. These responses collectively demonstrate either a failure to train support staff on basic payment processing facts, or a deliberate pattern of deflecting responsibility for a systemic issue. I have retained transcripts of all these exchanges. 
6. Resolution Sought I am requesting the CFPB to : 1. Direct PayPal to provide written confirmation of the MCC transmitted for each of the four transactions listed above. 
XXXX. Direct PayPal to explain in writing why MCC XXXX was applied to standard retail purchase transactions. 
3. Direct PayPal to reimburse me {$96.00} plus any additional accrued interest, representing the full cost of the misclassification. 
XXXX. Investigate whether this MCC misclassification represents a systemic pattern affecting other PayPal consumers using XXXX credit cards for XXXX or similar purchases. 
XXXX. Supporting Documentation Available PayPal account transaction records for all four transaction IDs listed above XXXX account statements showing cash advance fees and interest charges Written/verbal confirmation from XXXX of MCC XXXX classification PayPal customer support chat transcripts documenting contradictory and inaccurate responses

Company response to consumer: Closed with monetary relief