EcommerceBytes-NewsFlash, Number 2101 - August 20, 2009     2 of 3

As PayPal Goes Mainstream, So Do Its Blunders

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PayPal used to be a brand most associated with eBay buyers and sellers, but its success in going off-eBay and developing mobile applications has given it greater, more mainstream, brand awareness. So when the company blunders, more people are paying attention. And as the spotlight turns to PayPal's recent policy changes, the TOSBack.org website reveals that PayPal modified its Terms of Service again, yesterday.

This week, PayPal was named one of ten "breakaway brands" for 2009 by AOL DailyFinance, which worked with branding agency Landor Associates to develop the list. The online news site wrote, "Once a staple of the digiterati and eBay users, PayPal entered the vernacular over the last three years as more and more people have come to see it simply as an easy way to pay for things and send or receive money online." (Link.)

But others in the press and blogosphere were not so kind in their assessment of PayPal's conduct due to a change in fees that they claim the company failed to communicate to users.

A blog called Gadgetell.com has been covering the issue, and wrote in its latest article on the matter:

I'm not sure what made customers angrier, the new fees or the fact they weren't told about them, but one thing is clear - PayPal made a huge blunder here and until they recognize the fact, offer a proper apology, and change the way they do things so that policy changes are more transparent and thoroughly communicated, they will continue to draw ire from their users. I realize they hold a monopoly of sorts, especially now that eBay refuses to allow any other form of payment, but there will come a point when people have had enough, and eventually another company will come along and give Paypal some legitimate and stiff competition. It's bound to happen, and for many people, can't happen soon enough.

Ars Technica does a good job of summarizing the fee changes and why users are upset. It wrote on Wednesday:

PayPal made some policy changes in June, but it's likely that you haven't heard much about them until very recently. That's because the company quietly slid in extra fees that will affect nearly all users but failed to be transparent about the changes. Now, the Internet is slowly discovering what happened, and no one is happy about it.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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