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Class Action Lawsuit Says PayPal Restricted Funds

Posted by timothy on from the paypal's-been-good-to-me dept.

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?"

15 of 275 comments (clear)

  1. Ripped off.. by rufusdufus · · Score: 3, Interesting

    I have used Paypal exactly once. And exactly once I got ripped off. Not a good record.

    Now I was ripped off by the seller, not PayPal, so I think PayPal should have the right to do whatever it takes to stop fraud.

    1. Re:Ripped off.. by oolon · · Score: 3, Interesting

      If I payed by a check I could get the bank to trace which bank account it was paid into, in case of faud. If it has be lost of stolen in the post, I could get the bank to refund the money etc. Pay Pal knows the bank account it was payed into however does not pass on that trail to users if they require it. Bank all be in my country must. Banks want you to keep your money with them, take out loans etc, so they want to fix customer problems. Pay Pal has no reason to care as their only service is money transfer.

      However having said that Pay Pal does make it clear you should know who your sending your money too if you send it to the wrong person, or they just take it, they do state thats your problem.

      Ripoffs like this accure with banks too, like the nigrian gambit (you know pay me XX and let me use your account to unlock my funds and you get Y%) Of course that one is worse because they try to hook you for more and more. The good news is the police care about tracking those people down, so if you get emails/snails like they talk to your police.

      James

  2. What Rights are in issue here? by Anonymous Coward · · Score: 3, Interesting
    looks like this is a civil matter between paypal and the plaintiffs. there doesn't seem to any larger issue to it than that.

    seems the editors think any bad thing a company does violates your "rights".

  3. bank accounts... by edrugtrader · · Score: 3, Interesting

    i'm extremely concerned because i've heard stories of users getting paid with stolen credit cards... what does paypal do?

    assume you stole the card and try to launder the money to yourself, so they freeze and seize all money in your account AND bank account if you made a withdrawl

    now i'm nervous to even accept paypal for anything

    --
    MARIJUANA, SHROOMS, X: ONLINE?! - E
    1. Re:bank accounts... by Restil · · Score: 5, Interesting

      Then if you use paypal regularly, set up a bank account for that purpose. If you only recieve money through paypal, withdrawl any money as soon as you are able to, then move the money out of your spare account, except for a token amount to pay fees and whatnot. This way, the worst that can happen with such a problem is that you lose the most recent transaction.

      -Restil

      --
      Play with my webcams and lights here
  4. They're ripping me off right now! by jmorse · · Score: 3, Interesting

    Bastards did the same thing to me Monday. They completely botched my transaction because it was a time-is-of-the-essence matter. They accepted the credit card payment, then put a pending reversal on it the next day. I almost shipped the item I had sold, but luckily checked my email before doing so. They haven't even responded to my inquiry about the funds.

    Hmm. Let's see. They don't want to abide by the rules that banks have to follow, yet they want to screw their customers even worse than a bank. Sounds like they want to have their cake and eat it too.

    Does anyone have any info on how to become part of this class action suit?

    --

    "You done taken a wrong turn."
    -Bill McKinney, in Deliverance
  5. accepting paypal on your website by spookysuicide · · Score: 3, Interesting

    I accept paypal for both merchandise and for subscription services on my website [warnign pr0n] and have never had a problem with paypal, but I do feel like they give more protection to me as a seller than to people who use paypal to buy things. I have only had one dispute with someone who purchased something from my site, but paypal bent over backwards to help me prove that the dispute brought against me was false, and made it very easy for me to supply them with documentation proving the user received what he ordered from my site. ] Although that might have to do with them wanting to protect their commision. spooky

    --
    yes i run a goth/punk/emo porn site.
  6. PayPal is just bad news by Y-Crate · · Score: 5, Interesting

    The service they provide is excellent, but that should not be confused with the level of service they provide, which, I must say is sorely lacking.

    They have buggy software. This means on occasion, more money is withdrawn from your non-PayPal accounts then you authorized them to take. Giving them access to your checking account is a horrible thing to do, double-dipping is widespread and if you have any checks that need clearing, well......you are in trouble - assuming they haven't overdrawn your account in the first place (did it to me).

    Due to the sheer size of their user-base, and their inability to correct their problems, much less deal with the number of complaints generated by things that aren't their fault (action sellers taking money and running, for example) they've taken to a scorched Earth manner of dealing with problems.

    Any sign of trouble - your account is frozen - along with any money that might be there. Too bad if you're in the middle of a huge transaction involving lots of money that you really can't afford to lose.

    This is like using a nuclear device to wipe out an ant infestation. It causes much more damage to innocent users than you could possibly imagine.

    You have a problem, even if it is their fault they might not fix it. Wait more than 30 days to complain that they stole your money and guess what? The money is gone forever, you will never get it back. They will not allow you to file a complaint about their rape of your checking account if you wait more than a few weeks.

    To sum it up, PayPal provides a great service, but they have shown themselves to be incapable of actually providing that service with any great degree of reliability or accountability.

    This lawsuit has been a long time coming. More power to the plaintiffs.

    1. Re:PayPal is just bad news by Zeinfeld · · Score: 5, Interesting
      You have a problem, even if it is their fault they might not fix it. Wait more than 30 days to complain that they stole your money and guess what? The money is gone forever, you will never get it back. They will not allow you to file a complaint about their rape of your checking account if you wait more than a few weeks.

      Paypal may claim that to be the case, but Federal banking laws are against them.

      I have spent many years working on payments systems. I don't think it is possible to do what Paypal does profitably and comply with the banking regulations. I am not a lawyer, this is not legal advice, but I have spent very large sums on such over the years and my papers have been published in ABA journals (where B stands for either Banking or Bar).

      Like it or not, banking is a very highly regulated business. It really does not matter what Ayn Rand the Libertarian Party, Paypal or slashweenies think about whether that is right, Regulation E is the law.

      Paypal has been successful attracting merchants by transfering the risk that under Regulation E. rests with either the merchant or the bank to the consumer.

      The terms stated in the legal notices written by the Paypal lawyers are almost certainly irrelevant. The first recourse a customer has is to their bank, all credit cards are issued by banks, Visa and Mastercard are merely payment transfer associations (AMEX cards are issued by 'Centurion Bank').

      If a bank recieves a complaint from a customer that funds were withdrawn from their account without authorization a very specific and federally regulated complaint procedure begins. The consumer is protected against fraudulent charges over a $50 deductable if a signature is involved or in any amount otherwise.

      I very much doubt that the Paypal agreement is at all relevant to the issue. The alleged agreement has no effect on the federaly regulated relationship between the consumer and the bank. The bank can and will effectively reverse transactions that are alleged to be fraudulent, whether they take place by credit card or ACH.

      The specific case that the class action refers to appears to center on funds held in escrow for customers. The odd thing here is that it is difficult to see how Paypal can do this without functioning as a bank and being subject to regulation. The lack of FDIC insurance is irrelevant, FDIC insurance is not necessary to be accredited as a bank.

      Equally it is hard to see how the class action can possibly be successful. If Paypal loses the court case it is unlikely they will be in a position to continue operations.

      --
      Looking for an Information Security student project suggestion?
      Try http://dotcrimeManifesto.com/
  7. My lockout experience by sigma · · Score: 3, Interesting
    I recently had 2 ~$500 payments sent to my dormant for months paypal account, which apparently set off some trigger (whether in the name of greed or security) and my account was subsequently frozen.

    To unfreeze it, I needed to fax them:

    • A copy of my driver license
    • A copy of my most recent credit card statement
    • A copy of my most recent bank statement
    • A copy of a recent utility bill

    Despite the glaring violation of privacy, I did get the account unfrozen in under 24 hours, and I did find them easy to communicate with. However, I do believe that Paypal needs to be regulated as much as your local bank.

  8. I just want a debit card! by MikeFM · · Score: 3, Interesting

    I've had very good luck buying and selling with PayPal. I just wish I could get a debit card. I have a verified bank account with them but because they require a verified credit card and I don't use credit cards I seem unable to get a debit card. I'd love to be able to use PayPal as my main bank as I do most my shopping online and accept most my payments for my contract work as PayPal payments. It's a pain waiting 3-4 days to transfer to my bank so that I can pay for rent and food.

    I've been screwed by every big name bank I've had so I for one don't want PayPal to be more like a normal bank. I'm perfectly satisfied with them so far other than them being to careful with my money. :)

    --
    At what price learning? At what cost wisdom? The price is a man's peace of mind, and the cost is his life.
  9. never had a problem by OiBoy · · Score: 4, Interesting

    I for one have never had a problem with PayPal, and I've been using them for over a year and a half. I've needed to contact them for support exactly once (yesterday). Get this...I call the phone number and a REAL PERSON answers the phone on FIRST RING! Not only that, but they are courteous and helpful and resolved my problem in under 20 minutes. I've never had such a good support experience in my life.

    --
    `fortune -o`
  10. My experience with paypal.... by cheeserd00d · · Score: 5, Interesting

    ...has been anything less than fun. Somehow someone got my password and changed my primary email address, thus not allowing me into my account. Luckily I caught the e-mail that this happened (at least PayPal notifies you of that, even though everything else sucks....) and immediately transferred all of my money out of my savings account that PayPal was linked to, I then called the bank and they said they'd watch my account and I should open a new one to be safe. I also wrote to PayPal, but didn't get a response until 4 days later. By that time, someone has already tried to withdraw over $900 from my account. And guess what they told me to do in their support e-mail, they told me to log into my account and fix it! Hello! If the problem is my account was stolen and the username/pw changed then I obviously can't!
    Luckily my bank is being good about it and are not charging me for those overdrawn withdrawals. Needless to say, I will never use PayPal again, nor will I ever recommend it to anyone! Avoid it like the plague!

    --
    Two wrongs don't make a right, three lefts do!
  11. Once upon a time.... by macdaddy · · Score: 5, Interesting

    I had a seller back out on me after I'd already paid. Paypal was supposed to refund the $$ to me but refused. They said there was nothing I could do about it. I told the woman on the phone (after numerous calls) that there sure as hell was something I could do about it. I made the payment with me bank's check card. My bank's check card is a Visa Check Card and it affords all the same protection that any other card carrying the Visa logo carries, including fruad protection. I told her all of that and that I'd simply contest the charge and let Visa sort it out for me. She immediately told me to hold on the line and transfered me elsewhere. A guy quickly answered and was pissed from the word go. He was all but yelling. He spewed out some dribble about how if I contested the charge, their many lawyers on retainer would bring a suit against me and this and that and on and on and on. I laughed at him. Literally. And I told him I was contesting the charges immediately and a few other choice phrases. I contested the charges, my bank account was credited by the bank, and I never heard another peep about it. Screw me? No, screw you paypal.

  12. Re: or paypalwarning.com by Krellis · · Score: 4, Interesting

    Perhaps they're dedicating too many of their staff to providing "dedicated" account managers to their bigger "VIP" accounts. They have special phone numbers ("don't give this out to anyone else, it's just for our special VIP customers") and real e-mail addresses and everything. They seem to be staff at the same (or yet another) call center out in Omaha, Nebraska, anyway, though - the home of telephone support outsourcing!