The fee structure of eBay Inc.'s Bill Me Later instant credit service violates a California consumer protection law, according to a law firm that is suing the San Jose company on behalf of consumers.
Hagens Berman Sobol Shapiro LLP of Seattle, which has a San Francisc office, said it is seeking class-action status for the suit.
California law requires nonbanks to cap any interest at 10%. Bill Me Later's fees push interest above 100%, the lawsuit says.
The PayPal Inc. unit of eBay bought Bill Me Later Inc. last year. Steve Berman at Hagens Berman said in a press release last week that Bill Me Later's agreement with CIT Group Inc. to provide banking services does not excuse it from California laws. CIT is based in New York and chartered in Utah.
"Bill Me Later, not CIT, is making the decisions whether to grant consumers' loan requests, and funding those loans," Berman said.
A PayPal spokeswoman declined to comment.