The law firm of Hagens Berman Sobol Shapiro filed a class-action lawsuit against Bill Me Later Inc., an eBay-owned company offering consumers instant credit for online purchases. The law firm claims Bill Me Later violates California consumer-protection laws by charging customers inflated interest fees and late penalties. According to the complaint filed in the Northern District Court of California some consumers report that annual interest rate Bill Me Later charges exceed 100 percent per year.

According to Hagens Berman's announcement on its website:

The suit contends that Bill Me Later - which is not a government-regulated financial institution - has entered into a relationship with CIT Bank to create the appearance that the bank is extending credit terms. In fact, Bill Me Later controls the entire transaction.

Hagens Berman Sobol Shapiro is asking to represent California residents, who believe they have paid excessive fees to use the Bill Me Later option, and may be interested in participating in an action to stop these practices.

eBay acquired Bill Me Later in 2008 and has integrated the service into the PayPal wallet both on eBay and across ecommerce, meaning qualified customers can now use Bill Me Later as a funding choice from online merchants that accept PayPal Express Checkout.

A PayPal spokesperson said the company could not comment on pending litigation.

Information about the lawsuit is available on the law firm's website