I’ve been following a thread on the ebay forums about a controversy surrounding foreign transaction fees that PayPal started charging its Canadian users. Apparently, PayPal began charging the fee with little to no disclosure on transactions made with the PayPal debit card even if the transaction was made in Canada and in Canadian dollars. To make amends, PayPal agreed to refund fees on purchases made between October, 2006 and June, 2007. A PayPal representative had this to say:

I want to apologize for the time it has taken to respond with the necessary information. After reviewing your concerns, we have decided to refund all cross border and cross currency transaction fees paid by Canadian users between October 11, 2006 and June 1, 2007. The refund will be completed by June 30, 2007.

Please note that all cross border and cross currency transaction fees incurred after June 1, 2007, will not be refunded. To ensure that we do not have further confusion, we will change our user agreement to include this fee instead of relying on the agreement that user’s accept at sign up for the PayPal Debit Card.

Please accept our apology regarding this issue. I also want to thank the individuals who brought this matter forward. I feel this has once again proved the power of community and what we can achieve working together.

After June, PayPal will continue to charge the foreign transaction fees on purchases the same as before, so not much will change overall. It appears that PayPal has now updated their website to clearly state what their foreign transaction fees are, but this case highlights yet another example of companies not plainly and openly disclosing foreign transaction fees. This story has a happy ending, but only after customers took action make it so. At least, to PayPal’s credit, no legal action was required.