The prospective class action lawsuit alleges that PayPal routinely freezes users’ funds without explanation or a quick appeal.
Three account holders have filed a federal lawsuit against PayPal, alleging that the digital payments platform violated anti-extortion laws by freezing customer funds without explanation.
According to the lawsuit, PayPal, which has an estimated 325 million users worldwide, routinely imposes “holds” of up to 6 months on accounts allegedly violating terms of its 65-page user agreements.
Bloomberg reports that the complaint was filed by two California residents and a Chicago businessman. Together, the three claim that freezing PayPal would be tantamount to an illegal seizure.
Now the plaintiffs are trying to get their lawsuit certified as a class action, potentially representing anyone whose funds have ever been frozen by PayPal.
“PayPal has failed to notify plaintiffs and class members of the reasons for the actions PayPal is taking, and has even told plaintiffs and class members that they must “obtain a subpoena” to obtain the simple information about it.” why PayPal withheld access to their own funds and denied the plaintiffs access,” the lawsuit reads.
This isn’t the first time PayPal’s policies have gotten the company into trouble. According to Bloomberg, some of the platform’s more prominent users have publicly condemned the company’s practices. Professional poker player Chris Moneymaker, for example, threatened to sue PayPal after it allegedly withheld part of his $12,000 winnings.
“Anyone else whose funds have been seized by @PayPal is welcome to contact my attorneys who will commence a class action lawsuit,” Moneymaker wrote on Twitter.
Rubber-banded rolls of hundred-dollar bills; Image by Pictures of Money, via Flickr, CC BY 2.0, no edits.
Just days after Moneymaker posted his tweet, PayPal “mysteriously returned his money.”
The current lawsuit alleges that PayPal’s routine suspensions amount to commutation, “the act of unlawfully exercising dominion over the personal property of another” person or entity.
Similar to other federal lawsuits filed against large corporations in recent years, the plaintiff’s commutation claim cites provisions of the Racketeer Influenced and Corrupt Organizations Act. The law, often referred to by its acronym RICO, was invented to prosecute high-level organized crime figures such as those in the American Mafia.
The plaintiffs are seeking “damages and other remedies” from PayPal.
“Plaintiffs bring this class action against defendant PAYPAL, INC. (“PayPal”) to seek damages and other remedies available at law and in equity on their own behalf and on behalf of the members of the class action action defined herein… This action arises out of the Defendants’ widespread business practice of unilaterally collecting funds from the to seize financial accounts of their customers for no reason and without a fair or due process,” the lawsuit reads.
“PayPal is holding the plaintiffs’ own funds in their own PayPal accounts,” she adds. “PayPal has failed to notify plaintiffs and class members of the reasons for the actions PayPal is taking, and has even told plaintiffs and class members that they “must obtain a subpoena” to obtain the simple information about it.” get why PayPal withheld access to their own money and denied the plaintiffs.”
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