6 ms·

Putative class action against PayPal for holding sellers' money

58 points by 1337biz 14y ago

dangrossman 14y ago
Some law firm seems to attempt this very same class action suit every year, all the way back to the original case in 2002 that was settled with no admission of wrongdoing. This firm's the proud owner of this domain from 2010: http://www.letssuepaypal.com/ http://www.letssuepaypal.com/ I don't think any of these cases have gone anywhere. All banks offering Visa/MC card acceptance have the same "we'll hold your funds for 180 days if we close your account for risk/fraud reasons" term in their contracts, the same as PayPal's User Agreement. Doesn't seem to be illegal.
- viggity 14y ago
  sure, but you should be able to have some kind of recourse to be able to dispute the fraud allegations, right?
  - deleted 14y ago
    [deleted]
  - dangrossman 14y ago
    No, I don't believe you should have that. PayPal can choose who it wants to do business with, the same as you or anyone else. If they've closed your account and held the funds, it's because they decided there is too much risk associated with doing business with you. A process to dispute the decision not to do business with you, with the possibility of winning the dispute, is tantamount to forcing two parties into a contract, which goes against the very spirit of contract law -- that of agreement between two parties to enter into the arrangement. They hold on to any funds still in your balance for only as long as it takes to ensure you can cover chargebacks and reversals on your own payments, then disburse them to you and your relationship is ended. I don't think adding a dispute process to this would better the situation. It may be frustrating to have someone decide not to do business with you, but it's not illegal, and shouldn't be something you can dispute.
    - tomjen3 14y ago
      Strawman. He wants a process to dispute them unilaterally holdin on to your money, not to do business with you.
      - CamperBob2 14y ago
        I agree. Holding my money for 180 days with no appeals process amounts to a tort, and should be considered unconscionable and unenforceable when it appears in a contract. They shouldn't even be allowed to ask for that, because once one player creates such a policy, the rest will follow. Thought experiment: why not make it 5 years, instead of just 180 days? If a 5-year term were to become "standard industry practice," to paraphrase Dan, who could argue otherwise? They simply should not be able to exercise that kind of arbitrary power, at least not without being subject to standard banking regulations that can be modified as needed to balance the interests of financial institutions and their customers.
        dangrossman 14y ago
        This is the same hold policy at every regulated bank. It comes down from Visa and MasterCard's operating agreements. Its presence in standard merchant contracts predates PayPal's very existence. It's not arbitrary, either; it's the period in which the people that paid that money can file a chargeback or bank reversal to recover it.
        CamperBob2 14y ago
        It comes down from Visa and MasterCard's operating agreements. Thus illustrating one of my favorite pet sayings: "Any sufficiently dominant corporation is indistinguishable from a government." Nothing you are saying actually makes this policy right; you are simply reiterating its existence.
    - kalininalex 14y ago
      Financial industry is strictly regulated. Otherwise, imagine what would happen if banks could freeze your accounts freely, leaving you out without any means to pay for food or housing. Paypal could be that for larger merchants who could have substantial part of their assets tied up at Paypal. What I find interesting is that Paypal is essentially a bank, yet it's completely unregulated.
- deleted 14y ago
  [deleted]
- internetking 14y ago
  I just had a merchant account get 4 chargebacks in a month and the processor took every cent we processed on this merchant account the last 6 weeks (ACH'd it out) and is holding it for 6 mos. I have since had 2 more chargeback in the past 60 day. So a total of 6 chargebacks they took roughly 200X what has been charged back to hold for 6 months. Nothing I can do... fun.
davidpayne11 14y ago
Only a Freelancer would understand how shitty and shady Paypal's actions are. I hope someone else better than them replaces them soon and hope this case buries Paypal into the ground. They offer the highest transaction rates and lowest currency conversion rates...one of the shittiest companies I've ever dealt with.
- brdrak 14y ago
  Have you found any better alternatives out there? I'm planning to start freelancing again and was planning to use Paypal.
  - zoneinfinite 14y ago
    Stripe will probably beat PayPal if it finds a way to expand internationally quickly.
    - hrbrtglm 14y ago
      Stripe seems to be the perfect one, wepay looks like a great competitor to PayPal, in fact all the great payment processing companies are US only, I'm desperate finding a good solution available in europe, working in France as far as I'm concerned. Finaly, I'll go with PayPal, just because it's the only one working worlwide without a merchant account.
  - autophil 14y ago
    I'm using Skrill Moneybookers in adjunct with PayPal, but not to replace it (yet).
  - pm24601 14y ago
    I use Payoneer.com to pay my Russian developer. He seems to like it.
- OzzyB 14y ago
  Listen, you're doing yourself a huge disservice by accepting payment by credit card for "services rendered". I don't care what other credit card services are out there that seem to be more friendly than PayPal -- it doesn't matter -- you will always be at the mercy of Visa/Mastercard's policies, and they exist to empower the cardholder, not the merchant/provider. Asking for a cheque is fine, put it in your bank, wait for it to clear, go party.
kjhughes 14y ago
Yawn. Wake me up when I can join a class action suit against lawyers who chase high profile cases, win mega payouts for themselves, and leave the harmed with $1 checks or worthless discount vouchers. I long ago stopped wasting time reading most class action lawsuit participation notices I receive.
- batista 14y ago
  >Wake me up when I can join a class action suit against lawyers who chase high profile cases, win mega payouts for themselves, and leave the harmed with $1 checks or worthless discount vouchers. This makes the assumption that the only reason to join a class action suits is to be compensated or make money. How about to punish the entity that did you harm and stop it from doing it in the future? I could not care less if I made $0 on such a class action, if the end result was that PayPal was forced to reconsider it's ways.
  - malandrew 14y ago
    Exactly. I have especially despised Paypal/eBay since they started doing this and I don't care that lawyers make tons of money on this so long as Paypal is punished and learns a lesson.
- kalininalex 14y ago
  My impression is the primary purpose of class action lawsuits is to stop bad behavior, not necessarily to enrich plaintiffs. Lawyers do make quite a bit of money IF they win. They also take all the risks since class members don't pay anything for legal services upfront. So, class actions seem to be an important mechanism for correcting bad behavior of larger entities.

58 points by 1337biz 14y ago

Some law firm seems to attempt this very same class action suit every year, all the way back to the original case in 2002 that was settled with no admission of wrongdoing. This firm's the proud owner of this domain from 2010: http://www.letssuepaypal.com/ http://www.letssuepaypal.com/ I don't think any of these cases have gone anywhere. All banks offering Visa/MC card acceptance have the same "we'll hold your funds for 180 days if we close your account for risk/fraud reasons" term in their contracts, the same as PayPal's User Agreement. Doesn't seem to be illegal.

viggity 14y ago
sure, but you should be able to have some kind of recourse to be able to dispute the fraud allegations, right?
- deleted 14y ago
  [deleted]
- dangrossman 14y ago
  No, I don't believe you should have that. PayPal can choose who it wants to do business with, the same as you or anyone else. If they've closed your account and held the funds, it's because they decided there is too much risk associated with doing business with you. A process to dispute the decision not to do business with you, with the possibility of winning the dispute, is tantamount to forcing two parties into a contract, which goes against the very spirit of contract law -- that of agreement between two parties to enter into the arrangement. They hold on to any funds still in your balance for only as long as it takes to ensure you can cover chargebacks and reversals on your own payments, then disburse them to you and your relationship is ended. I don't think adding a dispute process to this would better the situation. It may be frustrating to have someone decide not to do business with you, but it's not illegal, and shouldn't be something you can dispute.
  - tomjen3 14y ago
    Strawman. He wants a process to dispute them unilaterally holdin on to your money, not to do business with you.
    - CamperBob2 14y ago
      I agree. Holding my money for 180 days with no appeals process amounts to a tort, and should be considered unconscionable and unenforceable when it appears in a contract. They shouldn't even be allowed to ask for that, because once one player creates such a policy, the rest will follow. Thought experiment: why not make it 5 years, instead of just 180 days? If a 5-year term were to become "standard industry practice," to paraphrase Dan, who could argue otherwise? They simply should not be able to exercise that kind of arbitrary power, at least not without being subject to standard banking regulations that can be modified as needed to balance the interests of financial institutions and their customers.
      - dangrossman 14y ago
        This is the same hold policy at every regulated bank. It comes down from Visa and MasterCard's operating agreements. Its presence in standard merchant contracts predates PayPal's very existence. It's not arbitrary, either; it's the period in which the people that paid that money can file a chargeback or bank reversal to recover it.
        CamperBob2 14y ago
        It comes down from Visa and MasterCard's operating agreements. Thus illustrating one of my favorite pet sayings: "Any sufficiently dominant corporation is indistinguishable from a government." Nothing you are saying actually makes this policy right; you are simply reiterating its existence.
  - kalininalex 14y ago
    Financial industry is strictly regulated. Otherwise, imagine what would happen if banks could freeze your accounts freely, leaving you out without any means to pay for food or housing. Paypal could be that for larger merchants who could have substantial part of their assets tied up at Paypal. What I find interesting is that Paypal is essentially a bank, yet it's completely unregulated.
deleted 14y ago
[deleted]
internetking 14y ago
I just had a merchant account get 4 chargebacks in a month and the processor took every cent we processed on this merchant account the last 6 weeks (ACH'd it out) and is holding it for 6 mos. I have since had 2 more chargeback in the past 60 day. So a total of 6 chargebacks they took roughly 200X what has been charged back to hold for 6 months. Nothing I can do... fun.

davidpayne11 14y ago

Only a Freelancer would understand how shitty and shady Paypal's actions are. I hope someone else better than them replaces them soon and hope this case buries Paypal into the ground. They offer the highest transaction rates and lowest currency conversion rates...one of the shittiest companies I've ever dealt with.

brdrak 14y ago
Have you found any better alternatives out there? I'm planning to start freelancing again and was planning to use Paypal.
- zoneinfinite 14y ago
  Stripe will probably beat PayPal if it finds a way to expand internationally quickly.
  - hrbrtglm 14y ago
    Stripe seems to be the perfect one, wepay looks like a great competitor to PayPal, in fact all the great payment processing companies are US only, I'm desperate finding a good solution available in europe, working in France as far as I'm concerned. Finaly, I'll go with PayPal, just because it's the only one working worlwide without a merchant account.
- autophil 14y ago
  I'm using Skrill Moneybookers in adjunct with PayPal, but not to replace it (yet).
- pm24601 14y ago
  I use Payoneer.com to pay my Russian developer. He seems to like it.
OzzyB 14y ago
Listen, you're doing yourself a huge disservice by accepting payment by credit card for "services rendered". I don't care what other credit card services are out there that seem to be more friendly than PayPal -- it doesn't matter -- you will always be at the mercy of Visa/Mastercard's policies, and they exist to empower the cardholder, not the merchant/provider. Asking for a cheque is fine, put it in your bank, wait for it to clear, go party.

kjhughes 14y ago

Yawn. Wake me up when I can join a class action suit against lawyers who chase high profile cases, win mega payouts for themselves, and leave the harmed with $1 checks or worthless discount vouchers. I long ago stopped wasting time reading most class action lawsuit participation notices I receive.

batista 14y ago
>Wake me up when I can join a class action suit against lawyers who chase high profile cases, win mega payouts for themselves, and leave the harmed with $1 checks or worthless discount vouchers. This makes the assumption that the only reason to join a class action suits is to be compensated or make money. How about to punish the entity that did you harm and stop it from doing it in the future? I could not care less if I made $0 on such a class action, if the end result was that PayPal was forced to reconsider it's ways.
- malandrew 14y ago
  Exactly. I have especially despised Paypal/eBay since they started doing this and I don't care that lawyers make tons of money on this so long as Paypal is punished and learns a lesson.
kalininalex 14y ago
My impression is the primary purpose of class action lawsuits is to stop bad behavior, not necessarily to enrich plaintiffs. Lawyers do make quite a bit of money IF they win. They also take all the risks since class members don't pay anything for legal services upfront. So, class actions seem to be an important mechanism for correcting bad behavior of larger entities.