Judge Says Paypal's Arbitration Rules Unfair

MooRogue points to this article in today's San Francisco Chronicle, which reports U.S. District Court Judge Jeremy Fogel's ruling that Paypal "attempts to isolate itself from challenges," noting "Judge Fogel also refused to dismiss the class-action lawsuit going against Paypal." I guess I've been lucky with PayPal so far, but I know a few people who haven't.

Comments

obligatory link

[packeteer]

www.paypalsucks.com

Is Ebay a bank?

[MrCaseyB]

I thought I remembered a story about a decision that would make ebay follow all the rules and regulations that traditional banks follow. What was the outcome of that and would that have prevented ebay from being able to screw people like this? IS Ebay even FDIC insured?

Re:Is Ebay a bank?

[Zeinfeld]

What was the outcome of that and would that have prevented ebay from being able to screw people like this? IS Ebay even FDIC insured?

FDIC insurance is irrelevant unless eBay (owner of Paypal) goes under. FDIC insurance is not a requirement to perform bank functions, but federal regulation is.

I don't see why Paypal is not subject to the same rules as any other bank or money transfer agent. Nor do quite a few state attorney generals. If you take money from consumers and hold it in accounts the Federal Reserve regulations apply to you, period, end of story.

This case is rather more interesting, the judge essentially threw out the mandatory arbitration claim as being, well arbitrary.

Contracts should not trump the law. It is one thing for two companies negotiating a million dollar contract to agree to be bound by arbitration, it is quite another for a company to unilateraly impose terms on consumers.

Of course extreeme Randite Libertarians will blather on incessantly about 'rights' however this is one case in which the law is defined empirically. The law is what courts rule it to be. Courts have refused to uphold contract terms that usurp the common good since the days of Claudius.

Federal small claims

[jbolden]

For local cases small claims courts work really well. Generally for about $25 you can file, there are no lawyers, the case takes place within a month of filing, the judge hears both sides and the thing is over in less than 15 minutes. Suprisingly often once you "sue" in small claims court you can get the other side to actually negotiate in good faith.

With the internet there is a great deal of "mail order" type business going on for a county based system to work. But the system itself works pretty well. I don't see any reason the Federal Government couldn't set up an internet based small claims court under the interstate commerce clause. Also maybe raise the limit to say $25k. For large cases hiring an out of state lawyer to handle a suit is not unreasonable its insane for small cases and there are lots of small cases.

good that a judge is doing this

[intermodal]

by doing this, it greatly reduces the strength of a EULA i would think...clickwrap's value as a legal tool is being shown here as not being what companies would like it to be, which is good considering the draconian things they put in them...i seem to recall one a while back where the eula said you could not write an unfavorable review of the software....

Re:new paypal scheme...

[Anonymous Coward]

I'm not sure I understand how that works? Someone wants to pay your $500 via Paypal. What exactly is a "gamling account" and how would someone deposit it there? Thanks.

WHY do people still join class-action suits?

[pla]

So far, in my life, I have joined three class action suits, all basically after-the-fact since I had no intention of suing on my own behalf and the letter said basically "join or give up your share".

In one, I don't actually know why someone filed suit, only that I got a free movie rental. In another, I got a whopping $4.00 (four *dollars*, not hundred) in exchange for well over a hundred dollars in abusively-applied late charges from my CC company (who I have only "fairly" paid late twice in over 10 years). In the other, I got less than the cost of the stamp to mail the response (don't even remember what company I got *that* cash-cow from).

After the CC deal, I resolved never to join another class-action suit.

The actual people who got screwed... get screwed again, by the lawyers, who make hundreds of millions. And, these settlements don't even "punish" the companies involved as a result, since it "costs" them less to pay off the occasional suit than by changing their offensive business practices.

I'll join another class-action proceeding when it involves the executives of the offending company going to prison. Other than that, I see no point in lining yet another up-and-coming lawyer's pockets with *my* suffering.

Re:WHY do people still join class-action suits?

[mosch]

class action lawsuits generally don't help you individually (unless you're one of the lawyers, or the damage was quite incredible), but they do help society as a whole, because it makes it hard for companies to knowingly fuck people lightly.

Let's say a company does something that screws you out of $20. Are you going to do anything? No, it doesn't make sense. Now let's say a lawyer finds a million people who got screwed, now the company is facing a real lawsuit, and has incentive not to pull those kind of shenanigans again, even though you might only get $5 back after all is said and done.

I'm all for class action lawsuits against paypal. A company who locked down a tad over $100 of my money, and won't even allow me to refund it to the sender. They're an illegal bank, and I'm happy to see that a money-hungry lawyer is busy fucking them hard, even if I never see a dime because of it.

btw, if you're looking for a paypal alternative that's run by a real bank, is FDIC insured, and doesn't charge you to send or receive money, check out c2it by citibank.

Re:WHY do people still join class-action suits?

[dillon_rinker]

...ungtil the law changes. Two things are necessary to fix corporate America:

1. Corporate death penalty. Hey, shareholders! Your stock certificates are now toilet paper, because you gave your money to criminals! This will encourage stockholder responsibility; no longer will they be able to focus on the bottom line to the exclusion of all else, unless they LIKE seeing their assets on an auction block.

2. Jail time for executives in civil cases. Demanding that I give you my wallet is a crime, but cheating someone out of $100,000,000 is business as usual? I don't think so. Just because the loss of cash results from a contractual disagreement doesn't mean that FRAUD is not occurring.

Financial regulation is needed everywhere

[Animats]

Banks are regulated. Money market funds are regulated. Credit card companies are regulated. Money transfer firms are regulated. Sooner or later, a judge is going to rule that PayPal is subject to regulation as one of those classes of businesses.

They're all regulated for a good reason. They hold other people's money. There's a strong temptation to abuse such a position. Historically that's been a major problem, and thus there is regulation. PayPal is no different.

It's all a gamble

[lpret]

Ebay is as much of a gamble as PayPal. If you're already *hoping* that the item you ordered on Ebay is truly what it is, one more gamble that you'll actually get your money sent is only reasonable.

Re:Paypals response:

[Fesh]

I'm not seeing this point brought up, so I'll go ahead and air it. The difference is that PayPal is a bank, whether they like it or not. They store money for you. They make it convenient to pay for things without using cash. A bricks-n-mortar bank would be screwed on so many different levels if it behaved like this, why is PayPal any different?