PayPal today promised to treat its US customers a little better and to pay $1.7m for the costs of a States investigaton into its terms and conditions.

The eBay-owned internet payments service has agreed with the Attorneys General of 28 states to shorten its user agreement and be less backwards in coming forward over its protection programs. And it is shelling out $1.7m to cover the states' costs in examining the company.

Also today, the company said it has reached a preliminary settlement in a class action suit, filed in 2005, alleging that it did "not clearly communicate information about its consumer protection programs related to specific types of transactions".

PayPal is to put $3.5m into a settlement fund, less admin costs and plaintiff fees. The agreement needs to be rubberstamped by the US District court in Brooklyn.

PayPal says it has already complied with many of the terms agreed with the US Attorneys General. It does not admit liability for any allegation in either case. ®

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