The corporate regulator alleges a contract clause that allows PayPal to keep any fees wrongfully charged to customers if the payments provider’s errors are not identified within two months is unfair.

The Australian Securities and Investments Commission sued PayPal in the Federal Court on Thursday, arguing the offending clauses – which appear in more than 600,000 PayPal contracts with Australian businesses – should be considered “unfair” under the ASIC Act and made void by the court.