PayPal Hides Pay-Later Plan’s Overdraft Fee Risk, Suit Says (1)

PayPal Inc. falsely touts its “Pay in 4" installment program to low-income customers as a free service, failing to disclose that they can incur large overdraft fees on their linked bank accounts, a Florida man alleges in a federal court lawsuit.

According to the PayPal website, app, and advertisements online including on social media, the service—which splits the purchase price over four payments—is completely free, with no interest or hidden fees, the would-be class suit alleges.

But there are often huge “late fees” and significant interest, albeit not assessed by PayPal, in the form of overdraft and insufficient-funds fees assessed ...