Class Action Lawsuit Against Paypal

@Immortaility - Is 1 in 10,000 a factual statistic? How do you define 'suspicious'?

Trouble is PayPal don't just freeze accounts for money laundering. Say for example you sell services to a substantial number of clients and receive three complaints/disputes in quick succession - that can be reason enough for PayPal to hold onto your money, until you A) Refund B) Prove you have refunded.

Bob50963 is absolutely correct - not everyone has the time to bow to PayPal's demands. People should understand that time = money, and a single hour dedicated to finding and sending forms is an hour less to devote to making money and earning an income.

Whether something is against PayPal TOS is absolutely irrelevant. That's their contract and if you breach it, that's fine - they have remedies they can use. Freezing your money isn't (lawfully) one of them.

@Peepin2me - It's not always necessarily related to proving identity or residence. It can be to do with any breach of their TOS.

A close friend of mine, a graphic designer, was left heavily out of pocket when PayPal froze his account. He had reached some unspecified threshold of complaints from customers and was required to provide 'shipping information' which was obviously not possible, or to enable PayPal to refund the pending claims against him.

Of course it was naive of him to have a significant amount of money within his PayPal account for this very reason, but when the rent fell due at the end of the month and his entire monthly income had been locked for 180 days online, it had more than a 'small or temporary' inconvenience.

As to an alternative strategy, I've got a great idea. Why don't PayPal, instead of blindly freezing accounts, take the time to investigate what they assume to be suspicious behaviour and refer the matter on to the police? If there is something criminal occurring, PayPal should have adequate records to forward that to the authorities whether or not money has been frozen.

As for freezing in the event of a breach of TOS, there's simply no excuse. Particularly when they are dealing with consumers, this is pretty illegal and I've no doubt a UK court would find in favour of a plaintiff in an action for recovery of frozen PayPal funds.

 

Paypal might as well put in there TOS - "Any payments you obtain in your account can be seized at any time, for any reason whatsoever and you, as the acceptor, can't do shit about it."

I've been in the situation and have had many close friends in it for no reason. Each time however paypal gave the money back but over time. Now if they keep 5k from you for months and months, they are basically making interest off the money they keep from you til they give it back...

AND I THOUGHT THE FEES WERE RIDICULOUS

 

Im sure just about every person who is against PayPal has done some non ethical sales and got caught.

 

You can resolve the disputes and dont have to refund.
That's not always the case.

If my car breaks down on my way to work I dont blame Mitsubishi for it.
This is not logically consistent. The PayPal account doesn't break. It's put on hold. If your car was stopped mid-journey and you were prevented from using it to travel to your work because some people steal cars, I'm sure you'd feel a little annoyed.

If it is illegal why have they been able to do it for years? That logic is flawed.
Not the case. I can assure you after a number of years studying UK law at University level that this is illegal.

The European Convention on Human Rights Art 6 outlines the way civil rights and obligations are to be dealt with. Nowhere does it say that a trial by a partisan 'judge jury and executioner' is fair. This is a basic human right, yet there are no grounds on which you can represent yourself or appeal.

The Unfair Contract Terms Act generally states that unreasonable contract terms, particularly in consumer contracts are unenforceable, where reasonableness requires consideration in part, to the strength of the bargaining positions of the two parties to the contract (i.e. weighted in PayPal's favour), and whether the customer ought to expect the term to be included based on what is customary of contracts of that type.

They've been doing it for so long because nine times out of ten it won't get anywhere. Too often people believe because they've written it in to their TOS they're stuck - not so.

I think you might be saying goodbye to your left leg...

 

I am pretty sure there is no "basic human right" to use paypal. If you think this is a civil rights or human rights issue then I suggest you spend a couple more years in your law classes.

 

No you have misinterpreted.

You are correct - there's no basic human right to use PayPal.

You do have a civil right to your money. Money is intended to be paid to you by whomever has sent it. It is a violation of your human rights for a third party to intervene and regulate how those rights/obligations are to be handled on terms contrary to those set out by Article 6. So, it is both a civil rights issue (where civil rights means rights opposed to criminal, e.g. under private law) and a Human Rights issue insofar as it relates to the European Convention on Human Rights.

 

It is a contract dispute. That is all.

 

Not when holding money without permission is involved.

 

What I don't get really is why, so many here are so convinced that the only reason for paypal to freeze an account is when someone is a fraud or breaking the laws.
Where money is involved there will always be scamers and thief's trying to get as much as possible out of it, but we are talking here about the harm that was done to HONEST people, and people trying to earn some cash by providing and, or selling services and items, etc.

A few months ago, I was busy online one night, when an email arrived stating that my paypal account was limited! At first I thought it was one of the scam emails that do not come from PayPal, but when I tried login in my paypal account I saw that the account was limited and that I could not use any of the funds available, nor close the account etc.

What was the reason? I have directories that are making use of the paypal payment system. According to their TOS, I am prohibited to accept money for the listings of web sites selling any kinds of prescription drugs/medicines etc. I was flabbergasted! WTH were these people talking about? And did they have to limit the access of my PayPal account that is the heart and blood of my entire online business for such an idiotic reason??
And couldn't they simply CONTACT, me and ask if I could delete such links from the directory, and to not accept any such PAID links in it while making use of their payment system. After all, even if I had read their users policy it was years ago and, before I stated with the web directories, so I did not know it was against their TOS to begin with. I have always believed that a web directory such as Yahoo's, or any other web directory had their own freedom in choosing whom they wish and wish not to be listed to begin with. And you do know that plenty of such drug selling stores are indeed listed in the big web directories online, don't you?

In any case, I tried reasoning with them at paypal, and they told me that the choice is, entirely mine and if I wished to continue the use of their payment system on the directories I had to play using their rules.

When I deleted all the prescription drugs selling sites they restored my paypal access within a few hours and the entire episode was of the duration of 6 to 7 hours. Trust me that my situation was precarious as I had the payment of my server coming in 2 days - which is in the hundreds of dollars, and many other subscriptions all paid by paypal, and I was also expecting several payments. And I would have never been able to use another payment method for the server and the rest while the money reserved for these purposes were all on my paypal account, which though had a limited access... The horror of it shook me terribly, and the knowledge that by the whim of Paypal your business and all you have been doing online for years could be gone just like that is scary... Yes, scary and crazy! And I have to start looking how to spread the risks from now on, and isn't there another payment system that I could start using and transfer at least 50% of my online transactions to it. Spread the risk is one of the marketing lessons that should ring the bell in anyone's head by now. All my business would have been done with, and I would have been ruined if I didn't bow and follow their rules , talking about my own case here.

Why do I care to tell you all this, and loose my time on DP? Simply because I'd like for people to start looking further than their own business and their own accounts is concerned. What happened to me is happening daily to hundreds of accounts, and you'd better hope that next one is not yours and with your web site(s).

 

Truer words were never spoken! I have seen hundreds of people that have had their accounts frozen. You can also look at this site and read horror stories for days!

 

They dont freeze funds at any time just because they want to. They detect suspicious activity and freeze it.

What if..
what if..
what if..

Thats your only argument. If you cant prove anything to fix the dispute you need to practice better selling. Or learn to take a loss so you dont have to spend ten minutes of your time when your account is frozen.



Thats like saying you cant compare four quarters to a dollar bill because they are of different materials.
If my car breaks down it HOLDS me from going somewhere. Yeah, I would be annoyed. I wouldnt try to sue Mitsubishi. I would try and get it fixed as soon as and as fast as I could so I could get on with my life.



You "knowing so much about law" should realize that a company cant have something illegal in their TOS and practice business for YEARS UPON YEARS without something being done about it.
One out of ten is all they need. Too bad it is totally legal which is why that one out of ten would never get anywhere.

 

What? You are showing your ignorance to the law here.

Anyone can write a contract with illegal terms in it. Just in the same way anyone can rob a bank or import drugs. That doesn't make it ok...

It's not as if I'm alone in thinking poorly of PayPal. It's not just with disputes either, PayPal freeze accounts without giving any reason or allowing any appeal. And that's a fact.

PayPal's 'years upon years' of business haven't gone unchallenged. In 2002 there was a class action suit on this exact issue in California. PayPal settled out of court, paying $9.25 million, rather than putting their business under the microscope and losing in court

What if...
What if...
What if...paypal weren't so great after all?

 

Police? Doesn't sound practical at all to me. Let's say the buyer is from Nigeria and the seller is from China. Which police would paypal go to? Since three (paypal being an American company) countries are involved, you will need to go to the interpol. For a dispute worth a few dollars is it really wise going to the interpol and wasting everyone's time? An easier way out would be to fax the required documents to Paypal and get the hold removed.

 

paypal is trash - end of story - they've screwed me over and thats enough for me to despise them

 

Youre beating around the bush here. No company that deals with millions of people for nearly ten years simply cannot keep illegal terms in their TOS for that long.

When PayPal freezes accounts people know why and they ALWAYS 100% OF THE TIME give you a way to get out of it. Dont lie and say they dont, you and everyone else knows that is not true.

They may have been challenged and decided to settle out of court but NOT because they would have lost. It is simply PR issues. When a company gets sued for something that looks bad in the public eyes the public will think it is true, even when it isnt. By settling out of court they receive less exposure and have less idiots believing what is not true.

If PayPal werent so great there would be another company in its place, having the same problems and same ignorant people complaining for no reason.

 

No company that deals with millions of people for nearly ten years simply cannot keep illegal terms in their TOS for that long
Yes they can. You're wrong. Contracts are only words which can be within the law or not - there is no magic barrier preventing them from writing illegal terms. I think it's now safe to say all the legal points have been covered without adequate response.

When PayPal freezes accounts people know why and they ALWAYS 100% OF THE TIME give you a way to get out of it. Dont lie and say they dont, you and everyone else knows that is not true.
Again this is untrue. PayPal send emails to the effect that they have frozen an account without any way to appeal or any justification.

Regards the PR issue, don't you think it looks bad that they paid almost $10 million to keep things quiet? That's alot of money for what is essentially a small company. It looks much worse for a court to decide you're doing something illegal and ordering you to pay up. Feel free to come up with relevant laws that might apply in PayPal's favour. I'm only basing this on the situation in Europe - it may be different (although I doubt it) in your area.

Here's some additional reading for you.

Do a search on Google for PayPal horror stories. You'll find out how foolish some of you comments and your undying loyalty to PP really are.

 

Its pointless to argue with you. I know 5th graders who would make more sense than you on this subject. You go in circles and say the same thing every time.

IF PayPal's TOS had illegal terms and they stole peoples money for no reason THEY WOULD NOT BE HERE. They would have been sued many many many times over and would have to change it. You cant use the argument that people dont want to sue them because they dont think they can. The people that could make a difference and change it would... if it was illegal. Everything points to it being legal.

Yes, paying $10mil looks bad. Having this issue in court for a year and being in the media- EVEN WORSE.

PPS is full of people who got "screwed" by PayPal but because it was their own fault.
All the horror stories you hear are fabricated to make PayPal look bad and are one sided.

 

Pretty naive and paranoid to think that everyone has it in for PP. I've made substantial points - you haven't. And I agree it's pointless arguing. So before we part ways, here's one final legal argument that combined with the previous few defeat your arguments (which are purely based on intuition).

When a customer sends you payment via PayPal, that is a transaction paid to PayPal on the condition that they remit it to you. This is known as a trust. As trustees, PayPal are liable to pay you money you are owed, as the beneficiary. So any money in your PP account is lawfully yours. They do not have the right to deny you that money, nor do they have the right to even investigate where that money is coming from.

And when they use your money to earn interest, they are liable to pay you that too. They are entitled to take fees, but not to use your money to earn them money, because that is your property. Look it up on Wikipedia or in your local law library if you're not sure. This is fact - not intuition.

 

You have provided no legal proof that it is illegal. You have stated a few laws that would not apply to this what-so-ever.

They DO have the right to investigate where the money came from because you use THEIR service. If you are scamming and performing illegal activities while using their service they arent just going to sit there and let it happen.

When the money is in your PayPal account it is yours, when you use or retrieve the money. Until then it is technically their money and may earn interest on it. Its funny that you complain about this... its cents that they earn through interest.

I hope you dont plan to become a lawyer because you will surely be laughed at in court. Im done here, BTW.

 

You knowledge of the law is severely lacking. That fact that you brag about your knowledge makes it that much more embarrassing for you. It is quite apparent that you don't know what you are talking about.