Class Action Lawsuit Says PayPal Restricted Funds

trenton writes: "CNET News.com reports a class-action law suit was filed Wednesday in California Superior Court in Santa Clara County. The suit charges PayPal with illegitimately restricting customers' access to their money. The suit asks for an unspecified amount of damages. Have you been ripped off or locked out?"

Comments

ANTI-PayPal Communities

[Joe Jordan]

Visit PayPalSucks.com for an entire community pissed off at PayPal.com's practices.

Not a problem for me...

[truesaer]

I always see a lot of angry people when these stories about paypal pop up. But I want to offer a bit of perspective....I had sold something and the buyer charged back against paypal, despite delivery of the item. I received an email from PayPal stating that they had received a charge back, but that they were absorbing the cost of it because I had accepted it from a verified paypal user and had satisfied their anti-fraud conditions (which really are very easy to follow). So, basically as long as this didn't happen often PayPal was eating the costs of fraud for me.

Now, maybe this doesn't happen in every case. And maybe if you accept funds from unverified users you don't get protection. But I just want people to know that every fraudulent transaction doesn't result in Paypal seizing your account.

On the other hand, they are very difficult to get in touch with except by email (which we all know is easy to ignore). This is somehting that should definitely be improved upon.

Still, I like paypal. If you want complete control, I suggest you get a merchant account. Frozen paypal accounts are, I believe, rare. And I think they involve more than just a simple charge back in most cases.

No PayPal

[DA_MAN_DA_MYTH]

NoPayPal is a site that made me avoid getting a Pay Pal account. I think Pay Pal is a great idea, however the business practices that is being portrayed is piss poor. Is there any competitors out there?

Use PayPal only with a Credit Card

[Trepidity]

Not a debit card or checking account. If they screw you over with an unwarranted credit card charge, your can call your credit card company and stop payment on it. If they pulled money out of your checking account (either directly or through a debit card), you're pretty much screwed (good luck trying to get your bank to do anything about it).

FWIW, using a credit card for most purchases is actually good advice, because it avoids all sorts of frauds and other problems (for example, a restaurant in a foreign country once charged my card twice; I guess they thought since I wasn't from around there I couldn't come back and complain. The CC company removed the fraudulent second charge after a simple phone call...if I had paid with a debit card it would've been a real pain to try to get my money back). This is provided, of course, that you are disciplined enough to pay your credit card bill on time to avoid going into debt and paying high interest rates.

Re:Use PayPal only with a Credit Card

[Zeinfeld]

Not a debit card or checking account. If they screw you over with an unwarranted credit card charge, your can call your credit card company and stop payment on it. If they pulled money out of your checking account (either directly or through a debit card), you're pretty much screwed (good luck trying to get your bank to do anything about it).

Your rights are the same in both cases and in fact you are dealing with a bank in both cases. The main difference is that with a credit card the dispute only affects your credit limit, if you are disputing a $500 charge your $2000 credit limit will be $1,500 until the dispute is respolved. If on the other hand you used a debit card you have $500 in your current account that you cannot use and is efectively deducted from your account for the duration of the dispute.

I had a recent dispute with a hotel that had illegally charged for a late cancellation despite having agreeed to a 6pm cancellation (Sunnyvale Hilton had changed to a Sheraton). First time round AMEX corporate sent me back a letter saying they had invsetigated the dispute and the hotel had provided the 'enclosed information' that proved their case - absolutely nothing in the letter. I then sent a snotty letter telling them that 1) I am also a Platinum customer so don't mess with me, 2) a photocopy of the booking agreement made by telephone through through an AMEX travel agent and 3) required them to send a copy of a signed charge voucher as required by regulation E.

The charge was refunded in full within a week.

Citibank on the other hand in similar circumstances sent me a sequence of nasty letters, made harrassing telephone calls to the home etc. until they sold the alleged debt to a collection agency. Unlike Citibank whose customer service was dreadful the collection agency was actually helpfull and gave me a fax number to which I served a cease and desist disputing the charge a few hours later and never heard any more. They even took note of the clause in the cease and desist where I stated that any communication to a third party (read credit agency) allegeing that a debt existed would be considered libelous.

One of the things I find frustrating about living in the US is that so many people are cowards who won't defend their rights against Equifax

Re:What Rights are in issue here?

[cheezedawg]

Well, if you read through the paypal TOS, you might see how it is a rights issue. Some examples:

-when you link a bank account with your paypal account, you are agreeing to let them take money out of your account at any time for any reason without warning. They have been know to empty peoples checking accounts to cover themselves if they suspect fraud.
-by agreeing to the TOS, you "waive" your right to pursue legal action against them. According to them, the only way to pursue issues with them is through an independant arbitrator. Obviously this doesnt hold up under scrutiny because a suit was just filed...
-paypal is not a bank- when you "deposit" money into your account, they become the legal custodians of that money. Thats how they can freeze peoples accounts on a whim.
-along with that last item, they are not FDIC insured, so when (not if) they become another .com statistic, you are out of luck with any money you have in your account.

paypalwarning.com has a lot more info if you are interested.

C2it...

[Brendan Byrd]

I just discovered it while reading a Salon article on PayPal's weak service. Apparently, it's run by Citibank, a REAL bank, so you'll less likely to get fucked over by them. (Keyword: less; banks still try to ram a dildo up your ass once in a while.)

Had No Problems

[Krellis]

dyndns.org has been accepting PayPal as our main source of income for quite some time now - we've had probably over $200,000 pass through PayPal without a single problem. In fact, yesterday they called to tell me that we've been assigned a dedicated account manager, with a secret VIP phone number and direct e-mail address and everything. So it seems that, at least to their larger customers, they're at least TRYING to improve the customer service.

All of these lawsuits and threats from states are sure making us nervous, though, and due to various other things we were probably dropping PayPal soon - that timeline's just been moved up now. But I agree with what someone said or at least alluded to earlier; even if 10,000 people have had problems like this, that's only a tiny fraction of PayPal's actual userbase, and that's pretty impressive to me.