July 5 (Reuters) - Australia's federal court has found

that PayPal's ( PYPL ) local unit used an unfair term in its

standard contracts with small business customers who overlooked

errors in overcharging, the country's securities regulator said

on Friday.

The court found the term was unfair because customers who

did not bring the overcharging errors to PayPal's ( PYPL ) notice within

60 days were forced to accept the fees as accurate, the

Australian Securities & Investments Commission (ASIC) said.

The ASIC had initiated court proceedings against PayPal ( PYPL ) over

this issue last September.

"Today's decision serves as a reminder to all businesses

that unfair contract terms contained within standard form

contracts with small businesses will not be tolerated, and that

ASIC will take decisive action where appropriate to protect the

rights of consumers and small businesses," ASIC Deputy Chair

Sarah Court said.

ASIC said that PayPal ( PYPL ) voluntarily assisted it during its

investigation.

PayPal ( PYPL ) agreed that the term was unfair, consented to the

declarations, and voluntarily removed the term from its

contracts on Nov. 8, 2023, according to the regulator.

"PayPal Australia takes our responsibility to our customers

very seriously and we have been working in full cooperation with

ASIC on this matter," a spokesperson for the company said.

The court also ordered PayPal ( PYPL ) to pay the ASIC's litigation

costs.