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This settlement is closed!
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A settlement has been proposed in a class action lawsuit alleging PayPal Inc. improperly handled disputed transactions and improperly placed holds on PayPal Accounts. If you had an active PayPal account between April 19, 2006 and Nov. 5, 2015, your rights may be affected by this class action settlement.
The proposed $3.2 million PayPal class action settlement will resolve allegations that PayPal improperly handled disputed transactions and placed holds, reserves or limitations on customers’ accounts without notice, and in some cases suspended or closed accounts. The plaintiffs claim that PayPal failed to provide customers with monthly account statements and error-resolution notices as required by the Electronic Fund Transfer Act.
PayPal operates an online payment processing service that facilitates payments between buyers and sellers of goods and services sold online. According to the PayPal class action lawsuit, the PayPal User Agreement indicated that upon a breach of its terms, PayPal “may hold funds in a seller’s account by placing reserves on accounts and/or limiting and/or suspending seller’s accounts and holding the funds in the accounts for up to and in some cases exceeding 180 days.”
The plaintiffs, who had used PayPal as sellers, claim that they all had funds in their PayPal accounts frozen for 180 days, but PayPal failed to inform them about the type of activity that triggered the account freeze. Further, PayPal allegedly failed to provide them with an opportunity to remedy the situation and avoid holds being placed on their accounts in the future.
PayPal denies any wrongdoing but agreed to settle the account hold class action lawsuit to avoid the expense and uncertainty of trial. The PayPal class action settlement was preliminarily approved on Nov. 5, 2015.
Who’s Eligible
You are eligible to file a claim for the PayPal class action settlement if you are a current or former user of PayPal in the United States who:
- Had an active PayPal account between April 19, 2006 and Nov. 5, 2015; and
- Had a hold or reserve placed on the account and/or the account was closed or suspended by PayPal.
If this definition describes you, you are a Claims Class Member.
Potential Award
Up to $2,000.
Claims Class Members may elect to make a Basic Claim or an Alternate Claim.
- Basic Claim: If you are a Claims Class Member and you elect to make a Basic Claim, your payment will be determined based on the dollar amount of the longest hold or reserve on your account. These Basic Claim amounts are expected to range from $3 to $440.
- Alternate Claim: If you are a Claims Class Member, you may elect to make an Alternate Claim to seek payment for your actual damages, up to a maximum possible payment of $2,000. If your Alternate Claim is denied, your claim will be treated as a Basic Claim.
Injunctive Relief:
PayPal has agreed to revise its User Agreement and add certain disclosures about its use of fraud and risk modeling. It has also agreed to change its policy with regard to requests for information, and to disclose the reason for a hold, reserve or limitation as long as this disclosure is not inconsistent with PayPal’s security requirements. All Class Members are entitled to this relief.
Proof of Purchase
Claims Class Members must follow the directions on the Claim Form and fill it out completely.
Claim Form
Claim Form Deadline
UPDATE: On August 1, 2016, a second claim form deadline of October 14, 2016 was added for class members who did not receive class notice on or before April 10, 2016.
UPDATE 2: On Nov. 14, 2016, PayPal users urged a California federal judge to grant final approval of a near $4 million settlement over claims the company placed inappropriate holds or reserves on sellers’ funds.
05/10/2016: If class notice was received on or before April 10, 2016
10/14/2016: If class notice was not received on or before April 10, 2016, but was received after this date.
Case Name
Zepeda v. PayPal Inc., Case No. 5:10-cv-02500 SBA, in the U.S. District Court for the Northern District of California
Final Hearing
01/11/2017
UPDATE 3: On November 23, 2016, the court continued the final hearing until January 11, 2017.
UPDATE 4, January 15, 2017: The court has continued the final hearing until February 8, 2017.
UPDATE 5: On March 24, 2017, the court granted the PayPal Account Hold settlement final approval. Let Top Class Actions know when you receive a check in the comments section below or on our Facebook page.
UPDATE 6: On April 17, 2017, an appeal to the PayPal Account Hold settlement was filed. Claims will not be paid until all appeals are exhausted. We appreciate your ongoing patience. Top Class Actions will continue to provide updates as we learn more.
UPDATE 7 on August 22, 2017: The appeals to the PayPal Account Hold settlement have been resolved. According to the settlement website, claims will be paid by October 24, 2017. Let Top Class Actions know when you receive a check in the comments section below or on our Facebook page.
UPDATE 8: On Oct. 26, 2017, Top Class Actions viewers who filed a claim for the PayPal Account Hold class action settlement started receiving checks worth as much as $23.15. Congratulations to everyone who got PAID!
Settlement Website
Claims Administrator
Zepeda v. PayPal Settlement Administrator
P.O. Box 4259
Portland, OR 97208-4259
Class Counsel
QUANTUM LEGAL LLC
LEXINGTON LAW GROUP
FARMER JAFFE WEISSING EDWARDS FISTOS & LEHRMAN PL
SEEGER WEISS LLP
Defense Counsel
STROOCK & STROOCK & LAVAN LLP
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239 thoughts onPayPal Account Hold Class Action Settlement
any updates
I had payed for some stuff never got it and failed clams never got my money back is that what there talking about if so what do I need to do plz help
I really do not remember all the details, but I do remember them freezing my account. After I attempted to purchase something after making several purchases on my person card, then being denied paypal credit. I tried to purchase something, but I was suspended and denied use of paypal for a period of time. I really do not remember all the details and I hope that the records will reflect of their attempt to mistreat me and my possible use of paypal for various services. I am glad I was contacted because I thought that was unfare to stop my ability to make purchases after I had already been shopping with paypal but was not using them for primary payment purposes, I was using my own card as I can remember at this time. Its been awhile so the details are vague. But Thanks for contacting me.
I wont be able to be part of this lawsuit because they just suspended my account. The reason? One of my buyers claimed that I sold something fake. I did NOT and I provided the original receipt. When I called to find out I am told that It does NOT matter if it was fake or not, if the buyer says that it is your account is frozen. They have taken over $7000 in my account and frozen it for 180 days. I just transferred $3000 to my bank the week before to cover my mortgage and car payment and they went into my bank account and took it back!!!!! This is not fair, it is not due process, I have been found guilty of something I did not do and they have ALL the power!!! I have called PayPal so many times to try and speak to someone to plead my case and they simply say that the AUP department does not take phone calls. How do they have the right to hold my money, take money from my bank account, and not verify the facts?? By the way, the sale was for an $875 Louis Vuitton handbag. I would have happily accepted the return and refunded the money, but because the buyer said it was fake it stopped all reasonable process. I am SOOOOO frustrated!!
Frustrated February 21, 2016
First off, you should NEVER use PayPal for large scale purchases period. That $7k was a red flag that you knew you were going to get scammed by both PayPal and the buyer. If that purchase was legit and you did everything legally, then why did you ship a product out or whatever before those funds were physically in your bank account. Second, You NEVER transfer anything over $2000 in less than 5 days, thats another Red Flag. Why would you have large sums of money sitting in your PayPal account, thats your own fault!
In regards to the $3000, you started the transfer, but what you dont bother to mention, is that those funds never posted to your bank account. If it did, PayPal would of never gone into your bank account for the simple reason that you can call up your bank and state that you never authorized PayPal to go into your bank account and deduct $3000. They need an ACH authorization form signed by you, or you have to be the one that initiated the transfer. Otherwise its disputed by the bank as not authorized and the money would of been back in your bank account.
If you do these types of large transactions, then you are FULLY AWARE of the risks of doing business online. You should have the common sense to say, if I post something online, especially on EBay, your going to run the risk of being scammed. You are fully aware of Ebay and your are fully aware of PayPal and what they do. (1) you leave large amounts of cash in your PayPal account – did you ever stop and think this would ever happen – im sure you are were well aware of it and got stupid and lazy thinking oh its not going to happen to me, while the whole time you had the notion this would happen one day (2) you post expensive things, did it ever occurr to you that you could be attracting fraudulent buyers. You should of had the brains to know that no one is going to be out any money or product other than you. You should of validated the address, make sure you had restricted delivery on the item, insure it for the full value, and file a law suit against the buyer and PayPal, while at the same time file a criminal mail order fraud charges against the buyer.
I just reread this reply “Sue PayPal again” and I know that “yes” its common knowledge that one should be aware that they may attract fraudulent buyers however should a person have to walk through life reacting to crime and criminals in such a way as it dictates their personal and business life? And how can you state that you are FULLY AWARE of the risks of doing business online. No one would do business online if they were FULLY AWARE of the the risks PayPal has subjected us to. Its convenient and Americans expect their government to protect them. After all that is why we have a government. FOR THE PEOPLE! Yes sue if you can afford to after you lost that much money because of the poor business practices of a business who is there to protect your money.
NO NO NO! Doing business online is not and should not be a risk! That is why we have government monitoring and YES businesses like PayPal. They are there to protect us. And yes businesses are expected to make money by doing business however one should expect a business like PayPal to mitigate the risk of doing business online! That is their business. That is why people use businesses and banks and that is exactly why people use PayPal. To protect their money.
Yes seller should have insured for the full value of what was shipped and PayPal is supposed to verify the address. However PayPal like some other businesses have corrupt employees and yes has had corrupt business procedures. And made errors. I can tell you from experience. NO WE SHOULD NOT HAVE TO EXPECT THE WORST WHEN DOING BUSINESS ONLINE. With that view applied to doing business then their would not be business, much like our stock market for instance. Our economy would crash just like the stock market plunges when people react in that way.
PayPal has processed bank withdrawals through banks and repeatedly without signatures I can tell you after repeated calls trying to stop them from doing it I lost two bank accounts. Literally I was told by my Bank of America banker that the only way to stop them from an automatic withdrawal was to close the account and that was after she spoke to them on the phone on my behalf.
PayPal flat out refused to stop the withdrawals that I never signed for. The only authorization PayPal had was a click of a button and the payee’s so called authority. And a year later PayPal sent through one of those same automatic withdrawals from that same payee to my other and different bank. All for a website that I had closed for overcharging me and of which I had not authorized further Payments on. Paypal stated to that second bank “Chase” that I had authorized it years before. I was forced to close my online store and business because of overcharges to the Bank of America Bank and was further hindered from doing business and credit through Chase. I was refunded just a portion of the charges incurred due to the overcharges and PayPal errors.
NO ONE SHOULD HAVE TO EXPECT ROBBERY AND FRAUD WHEN DOING BUSINESS! WE SHOULD FEEL SAFE SO WE CAN SPEND MORE. THAT IS KEY TO BUSINESS SUCCESS.
Supporting documents: Where or how can I obtain those documents. No where in my Paypal account that I can find those documents plus they updated their website and it is very different now from years ago. I have had several holds on my account a few years back.
regarding documentation: I just took screenshots of the parts of my paypal account where it said limited due to blah” and the message in my account where they said “closure is permanent thanks now go away” and made mention of the phone call (primary method of contacting paypal for many of us is via phone, how are we supposed to prove that?) just do what you can and if the lawyers need more I’m sure they’ll ask.
Paypal scams me with temporary holds and closed account after 10 days and held my balance for 180 days. Good thing I still have those emails and I submitted them as supporting document. Filing for alternate claim since they ruined my x-mas and new year funds.
PayPal just sent me a email as a Class Member of this settlement. I had $14k in my account for a car transaction via a credit card !!!! My $$ was frozen 4 months and I hired a lawyer !!!
Cannot enter supporting documents, what do you have to do?
supporting documents my case was 2011, doesn’t make sense what would I upload?