Our ever vigilant Attorney General, Eliot Spitzer, announced yesterday that the online escrow-type service PayPal has agreed to settle charges that it had mislead its customers when those customers’ online purchases did not pan out. You can read the settlement agreement here. One customer has beaten AG Spitzer to the punch.

Although plaintiff’s attorneys always try to stick Section 349 into a complaint, PayPal’s practices raise precisely the type of issues for which Section 349 of the General Business Law was designed — that is, the potential to mislead and affect the public at large.