Litigation




In March 2002, two PayPal account holders separately sued the company for alleged violations of the Electronic Funds Transfer Act (EFTA) and California law. Most of the allegations concerned PayPal's dispute resolution procedures. The two lawsuits were merged into one class-action lawsuit (In re: PayPal litigation). An informal settlement was reached in November 2003, and a formal settlement was signed on June 11, 2004. The settlement requires that PayPal change its business practices (including changing its dispute resolution procedures to make them EFTA-compliant), as well as making a US$9.25 million payment to members of the class. PayPal denied any wrongdoing.

In June 2003, Stamps.com filed a lawsuit against PayPal and eBay claiming breach of contract, breach of the implied covenants of good faith and fair dealing, and interference with contract, among other claims. In a 2002 license agreement, Stamps.com and PayPal agreed that Stamps.com technology would be made available to allow PayPal users to buy and print postage online from their PayPal accounts. Stamps.com claimed that PayPal did not live up to its contractual obligations and accused eBay of interfering with PayPal and Stamps.com's agreement, hence Stamp.com's reasoning for including eBay in the suit.

Craig Comb and two others filed a class action against PayPal in Craig Comb, et al. v. PayPal Inc.. They sued, alleging illegal misappropriation of customer accounts and detailed their customer service experiences, including freezing deposited funds for up to 180 days until disputes were resolved by PayPal. PayPal argued that the plaintiffs were required to arbitrate their disputes under the American Arbitration Association's Commercial Arbitration Rules. The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law." Paypal agreed to pay $9.25 million as a result of the case.

In September 2002, Bank One Corporation sued PayPal for allegedly infringing its cardless payment system patents. The following year, PayPal countersued, claiming that Bank One's online bill-payment system was an infringement against PayPal's online bill-payment patent, issued in 1998. The two companies agreed on a settlement in October 2003.

In November 2003, AT&T Corporation filed suit against eBay and PayPal claiming that their payment systems infringed an AT&T patent, filed in 1991 and granted in 1994. The case was settled out of court the following month, with the terms of the settlement undisclosed.

In June 2011, PayPal and Israel Credit Cards-Cal Ltd. were sued for NIS 16 million. The claimants accused PayPal of deliberately failing to notify its customers that ICC-Cal was illegally charging them for currency conversion fees.

A class-action lawsuit filed in 2010 was settled in 2016, in which the plaintiffs contested PayPal's "holds" on funds. PayPal has proposed a settlement in the amount of $3.2 million in Zepeda v. PayPal which has yet to be ratified. As part of the settlement, the company agreed to change some of its policies.

CFPB consentedit

On 21 May 2015 PayPal agreed that PayPal Credit would pay a $25 million fine to settle a complaint filed in Federal Court by the Consumer Financial Protection Bureau. The complaint alleged that consumers using PayPal were signed up for PayPal credit accounts without their knowledge nor consent. It alleged that PayPal had promised discounts and payment options the consumers never received, and that users trying to sign up for the regular, non-credit, PayPal accounts were signed up for credit accounts instead. The complaint was filed in the United States District Court for the District of Maryland, which ordered PayPal Credit to refund $15 million to consumers and to pay a $10 million fine.

Comments

Post a Comment

Popular posts from this blog

Digital marketing with PayPal

PayPal launches different marketing activities in various channels and emphasizes that consumers can use it in different ways. PayPal's marketing includes TV commercials, outdoor advertising, Facebook, and display advertisement. PayPal provides free analytics to traders about the ways that consumers utilize online payments. Through the free tracking service, PayPal assists traders in targeting consumers. PayPal's code gathers the consumer information which can be installed on the trader's website. Both PayPal and traders benefit from the free service. PayPal partners with Synchrony Financial to provide the PayPal Cashback Mastercard, which offers 2% cash back to customers who use the card to make purchases both online and in physical stores. PayPal’s cashback financial service promotes the number of potential customers. Apple allows PayPal as a mode of payment for App Store, Apple Music, iTunes, and Apple Books. PayPal can increase usage of Apple platforms. In addition, Pay
Read more

PayPal

Image
PayPal Holdings, Inc. is an American company operating a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders. The company operates as a payment processor for online vendors, auction sites, and many other commercial users, for which it charges a fee in exchange for benefits such as one-click transactions and password memory. Established in 1998 as Confinity, PayPal had its initial public offering in 2002. It became a wholly owned subsidiary of eBay later that year, valued at $1.5 billion. In 2015, eBay spun off PayPal to eBay's shareholders. The company ranked 204th on the 2019 Fortune 500 of the largest United States corporations by revenue.
Read more

Safety and protection policies

The PayPal Buyer Protection Policy states that the customer may file a buyer complaint if he or she did not receive an item or if the item he or she purchased was significantly not as described. The customer can open a dispute within 180 days from the date of payment and escalate it to a claim within 20 days from opening the dispute. If the buyer used a credit card, he or she might get a refund via chargeback from his or her credit-card company. However, in the UK, where such a purchaser is entitled to specific statutory protections (that the credit card company is a second party to the purchase and is therefore equally liable in law if the other party defaults or goes into liquidation) under Section 75 Consumer Credit Act 1979, the purchaser loses this legal protection if the card payment is processed via PayPal. Also, the Financial Ombudsman Service position is that section 75 protection does not apply where PayPal or any eMoney service becomes involved in the credit card transactio
Read more