PayPal, the e-payment company acquired by internet auctioneer eBay, is under investigation for possible violations of US
consumer protection laws.
The firm, which recently opened offices in Europe, has been criticised by ex-customers for freezing accounts without warning when a fraud is suspected, and not providing contact telephone numbers.
This is the first time that PayPal has apparently been under formal
investigation in the US.
In a statement, PayPal said that as a result of customer complaints,
it had received enquiries regarding its restriction and disclosure
practices from the Federal Trade Commission and the attorney general in a number of US states.
"If PayPal's processes are found to violate federal or state law on
consumer protection and unfair business practices, it could be subject to an enforcement action or fines," the statement added.
EBay declined further comment, but the company has said previously that fraud levels account for under 0.5 per cent of its