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PayPal Pays $5.2 Million To Settle Suits

The eBay subsidiary also promised to streamline its user agreement and provide more information about how it's protecting users' financial data.

PayPal agreed Thursday to pay $3.5 million to consumers and $1.7 million to 28 states to settle a pair of lawsuits that charged the electronic payment provider didn't adequately inform users how it was protecting their financial data.

The San Jose, Calif. subsidiary of online auctioneer eBay also promised to streamline its user agreement and provide more information about its data protection programs.

The bulk of the payment will go to settle a 2005 class-action lawsuit filed in New York that alleged the company didn't clearly communicate its protection programs to consumers. Another $1.7 million will go to cover the costs of investigations by 28 states' attorneys general, including those in California, Illinois, Minnesota, New York, North Carolina, Ohio, Oregon, South Dakota, Texas, and Washington.

"Under the terms of the settlement agreements, PayPal is not admitting any liability for any of the allegations in the two cases," the company said in a statement.

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