Originally posted 1/13/16. Reposting on 7/31/16 since many people are getting the email from Paypal now about this lawsuit.
Paypal Class Action Lawsuit
Paypal has agreed to pay $3,200,000 in a settlement over claims that it inappropriately froze or closed accounts and another possible $800,000 for certain Claims Members. Paypal denies any wrongdoing but agrees to make the payment to spare expensive litigation.
Plaintiffs allege, among other things, that PayPal improperly handled disputed transactions on PayPal accounts and improperly placed holds, reserves, or limitations on accounts or closed or suspended accounts. Plaintiffs also allege that PayPal failed to provide them with annual error-resolution notices and monthly account statements allegedly required under the Electronic Fund Transfer Act.
Submit a claim form here to take part in the lawsuit.
Who is Eligible?
If you had a hold or reserve placed on your account and/or your account was closed or suspended by PayPal between April 19, 2006 and November 5, 2015, then you are eligible to take part in the lawsuit and you can submit a claim for a cash payment.
Technically, all Paypal members are eligible to join (for what it’s worth), but payment is only to those who had a frozen or suspended account.
How Much Can We Get?
Not much.
| Length of Hold/Reserve |
Hold/Reserve under $1,000 |
Hold/Reserve $1,000 to $10,000 |
Hold/Reserve over $10,000 |
|---|---|---|---|
| 1–30 days | $3.00 | $3.00 | $36.00 |
| 31–90 days | $3.00 | $5.00 | $150.00 |
| 91–150 days | $3.00 | $10.00 | $100.00 |
| Over 150 days | $14.00 | $25.00 | $440.00 |
Let’s assume you had money frozen for 6-months, the Paypal standard, you still won’t get more than $14 for amounts under $1,000 and $25 for amounts under $10,000.
Final Thoughts
Oh my, how I’ve been waiting for this one!
Truth be told, the serious money here is for people who had lots of money frozen in their Paypal accounts. Many real businesses have gotten thousands or millions frozen by Paypal and they’ll get up to $440 out of the settlement. I had (or, rather, have) ~$15 frozen and I won’t get more than $14.
Unsure if I’m actually going to take part in the lawsuit since Paypal has been known to shut down new Paypal accounts when investigating accounts and I prefer to just fly under the radar and leave my $15 frozen in perpetuity.
It looks like this lawsuit is in its initial stages and will probably drag out for some time. For more info, see the FAQ page here.
HT: hindsightwas2020 on Reddit
