PayPal Class Action Suit

If you are one of the millions of PayPal customers then you should have received an email this week (7/31/04) regarding a class action suit filed against the company.

In the email (which I threw away), PayPal customers were told that they might be eligible to receive payment as part of a class-action lawsuit settlement signed last month.

The suit revolves around the fact (or alleged fact) that PayPal froze thousands of accounts unfairly, beginning in 1999. Freezing the accounts prevented people from being able to access their money. PayPal, which denies any wrongdoing, has agreed to set aside $9.25 million to compensate users who feel they were treated unfairly. [PayPal settlement e-mail confuse recipients: msnbc.com]

So, how does this affect me?

If you opened a PayPal account between October 1, 1999 and January 31, 2004, you may be included in the Settlement Class [PayPal Litgation Settlement Website: Description of those included in the Class].

Do I have a claim?

Undoubtedly, this is going to be open to anyone who wants to make a claim (real or otherwise). Here are the guidelines as to whether or not you have a claim:

(i) experienced or reported to PayPal an unauthorized or incorrect electronic transfer to or from their PayPal account including, without limitation, electronic transfers initiated by (a) you ; (b) PayPal in connection with, among other things, chargebacks, refunds, buyer complaints, PayPal’s Seller Protection Policy, Buyer Complaint Process and/or Buyer Protection Policy; or (c) any third party;

(ii) had access to your PayPal account improperly, incorrectly or erroneously limited or restricted, in whole or in part; or

(iii) made a request for information in connection with PayPal’s restriction or limitation of your PayPal account or regarding an incorrect or unauthorized electronic transfer to which PayPal did not respond at all or did not respond to your satisfaction.

There are two forms that you can use to make your claim. The Short Form will allow you to receive $50 from the suit. I suspect that this is the one that most people will use because it requires less documentation. The Long Form requires more documentation in support of your claim, but allows you to receive more compensation.

All claims have to be submitted by October 23, 2004, and can only be submitted through the online form.

What may be most telling about the entire situation is the confusion the emails caused. Due to recent email scams (PayPal Email Scam: fightidentitytheft.com), people have become wary when it comes to responding to email regarding PayPal and other financial institutions. Couple that with the fact that (a) they were being promised money, (b) the PayPal Litigation Website doesn’t instill the greatest amount of confidence that it is legitimate and (c) when alert consumers did forward the e-mail to PayPal they received automated replies saying it was a hoax, and you have mass confusion from the masses.

For more information on this Class Action Suit, visit the PayPal Litigation Settlement Website.