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California laws limit the amount of fees to the actual damages a lender suffers as a result of failing to pay on time, and the interest rate for these types of consumer transactions can be no more than 10 percent, according to the lawsuit.
Gary Marino, formerly of Citibank and First USA, started Bill Me Later in about 2000 with $100 million in venture capital, according to the lawsuit. Bill Me Later was acquired by eBay in 2008 for $820 million so the latter could enhance its payment services that already included PayPal, the company that facilities online transactions by providing easy-to-use payments through participants’ bank cards or accounts.
According to eBay’s 2011 annual report to the Securities and Exchange Commission, Bill Me Later last year bought $585.5 million worth of consumer loans from WebBank.
Bill Me Later is offered by 1,000 online stores, catalogs and travel partners, including Borders, Blue Nile, Bluefly, Continental Airlines, eLUXURY, Fujitsu, JetBlue, Overstock, QVC, Toshiba, Toys R Us, U.S. Airways, Walmart.com and Zappos, according to the lawsuit.
The suit asks the court enjoin Bill Me Later from violating California unfair-competition laws, order restitution to consumers and assess punitive damages, costs and fees.
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