PayPal purchase protection doesn't shield from lawsuits: German court

The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. REUTERS/Thomas White/Illustration

KARLSRUHE, Germany (Reuters) - Germany’s highest court ruled on Wednesday that PayPal’s purchase protection scheme does not shield customers from being sued for the price of items they bought online even if PayPal had granted them a refund.

Under PayPal’s scheme, customers may get their money back if they do not receive a product they ordered and paid for via its platform or if the goods are different than described.

The German court’s ruling relates to two separate suits in which customers had demanded and received a refund of money they had paid for online purchases, in one case a smartphone and in the other a band saw.

In both cases, PayPal had transferred the money back from the sellers to the customers.

But the court said on Wednesday that the sellers still had a right to pursue payment of the purchase price, even after money had been refunded, because PayPal’s policies stated that its purchase protection scheme did not affect the contractual rights of the buyer and seller.

It also said that PayPal’s purchase protection only involved a “simplified test” that could not ensure the interests of both parties were sufficiently met.

PayPal said it would await details behind the court’s ruling before taking any action.

Reporting by Ursula Knapp; Additional reporting by Nadine Schimroszik; Writing by Maria Sheahan; Editing by Keith Weir