SAN FRANCISCO, Sept 28 (Reuters) - EBay Inc.'s (EBAY.O: Quote, Profile, Research) online payments unit, PayPal, has signed an agreement with attorneys general from 28 U.S. states to clarify how it notifies consumers of measures it takes to protect their financial data, the company said on Thursday.

Under the deal, PayPal will $1.7 million to the states.

PayPal also said it reached a settlement in a proposed class action lawsuit by PayPal customers in U.S. District Court in Brooklyn. The company agreed to set up a settlement fund of $3.5 million, less court and attorneys fees.

Under the terms of the settlement deals, PayPal is not admitting any liability for any of the allegations in the two cases, PayPal said.

PayPal (EBAY) Announces Settlement with 28 United States Attorneys General
09-28-2006 11:48:56 AM PayPal, an eBay (Nasdaq: EBAY) company, announced that it has signed an agreement with 28 United States Attorneys General. In this voluntary agreement, PayPal will, among other things, shorten and streamline its user agreement and communicate more information relating to its protection programs. PayPal has already complied with many of the terms in the agreement.

To cover the cost of the investigation, PayPal will pay $1.7 million to the Attorneys General. PayPal also announced today that it has reached a preliminary settlement agreement with a proposed class of PayPal customers in an action pending in U.S. District Court in Brooklyn. The settlement fund, which will be paid by PayPal, will total $3.5 million, less administrative costs and any amount awarded to plaintiffs' counsel by the court. The settlement will be presented for preliminary approval to the District Court in the coming months.

Under the terms of the settlement agreements, PayPal is not admitting any liability for any of the allegations in the two cases.
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