Against PayPal Holdings, Inc. filed a lawsuit for blocking user accounts. Three plai.jpgs filed charges under the following articles:
illegal seizure of someone else's personal property (conversion);
extortion and banditry (racketeering);
breach of contract;
unjust enrichment.
Other users whose PayPal accounts were blocked in previous years may also join the lawsuit. The victims are demanding damages, penalties and compensation.
The case was filed by three plai.jpgs, two of whom are residents of California and an entrepreneur from Chicago:
Lena Evans has been using PayPal for 22 years. Her account was blocked, and six months after the blocking, $26,984 was withdrawn from her account without explaining the reason. Evans has used PayPal to buy and sell clothes on eBay, exchange money for a poker league she owns, and a non-profit organization that helps women with a variety of needs.
The company confiscated more than $42,000 from Roni Shemtov, also without explaining the reason why the account was closed. When the victim contacted the company, she was given several conflicting explanations. One rep said she was using an IP address and a computer that was being used by another user. Another rep said she was selling yoga clothes 20% to 30% off retail price. Another rep said she used multiple accounts. Roni denies this.
The defendant confiscated more than $172,000 from the third plai.jpg, Shbadan Akylbekov, without immediately explaining the reason for blocking the account. Akylbekov used the account of a family firm to sell Hyaluron Pen devices, which are needleless syringes for injecting hyaluronic acid into the skin of the face, lips, etc. (changing appearance at home). Only after the confiscation of funds after 180 days from the moment of blocking did PayPal send a notice of violation of the user agreement and the acceptable use policy (AUP). Allegedly prohibited from "accepting payments for the sale of injectable fillers not approved by the FDA." The notice also states that the money is seized "in accordance with the user agreement for damages resulting from the violation of the AUP."
PayPal has long angered many users by blocking accounts, restricting input / output functions, freezing funds for six months or more. One of the high-profile cases occurred with American poker professional Chris Moneymaker, who had $12,000 withdrawn from his account after six months of withdrawal restrictions.
Moneymaker was about to file a class action lawsuit and began to call on other victims when his funds were "mysteriously returned", so that the lawsuit became null and void.
The new claim emphasizes that the claims "arise from the defendant's widespread business practice of unilaterally withdrawing funds from its clients' financial accounts for no reason and without any fair or due process."
The document states that PayPal "froze" the plai.jpgs' funds in their own accounts without informing them of the reason(s) for the action taken. PayPal told the plai.jpgs they "need to get a subpoena" to get simple information about why the site is denying the plai.jpgs access to their own money. Under US law, such actions may qualify as illegal extortion and banditry (racketeering).
20 years of bullying users
Approximately twenty years ago, PayPal implemented the practice of mass blocking accounts without explanation. To unlock, you need to send several documents to confirm your identity and address. Document requirements are so strict that sometimes it's easier to forget and make a new account. And after blocking the account, it is quite difficult to withdraw your funds.
The founder of PayPal is Maximilian Levchin, a former hacker from Odessa, known in the underground under the nicknames Mad Russian and Plumber. As the technical director of PayPal, it was he who developed the first Igor anti-fraud system, the prototype of more advanced systems that are still in use today.
By law, PayPal is not a "financial institution" and therefore is not subject to government regulations that banks are subject to. This is just a commercial company that earns profit in all available ways.
Previously, money on user accounts was often frozen under the pretext of violating a client agreement that prevented CIS citizens from opening PayPal accounts. Restrictions are still in place for citizens of Ukraine and Belarus. They are only allowed to use PayPal to send funds.According to some researchers, PayPal's main miscalculation is that it perceives the fraud problem not as a legal problem, but as a risk management problem. The anti-fraud system is self-learning and works on the principle of a black box.
Thus, in many cases, PayPal does not know at all why a particular user's account was blocked. Accordingly, the support service is unable to explain anything and cannot help in any way.
One of the companies that suffered from PayPal wrote on e that in such a situation, one can only accept: “It is probably better not to keep significant amounts in the account and withdraw money as often as possible. It seems that the mass blocking of accounts without explanation is the genetic nature of the PayPal business.”
P.S. Since last year, PayPal has introduced a fee for user inactivity.
Lawsuit by Evans et al. v. PayPal Inc. will be heard in the District Court for the Northern District of California. Case number 5:22-cv-248.
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