PayPal Faces Lawsuit for Freezing Accounts and Seizing Funds
Three PayPal users have filed a federal lawsuit against the online payment service. The plaintiffs say the company unilaterally seizes funds from its clients’ financial accounts, without cause and without any fair or due process. They are seeking to recover damages and other relief available on behalf of themselves, as well as on behalf of the members of the class.
Lena Evans, one of the plaintiffs who’d been a PayPal user for 22 years, said the website seized $26,984 from her account six months after it got frozen without ever telling her why. She had been using PayPal for clothing purchases and sales on eBay, to exchange money for a poker league she owns and to run a non-profit.
Roni Shemtov said PayPal seized over $42,000 of her money. She never received a good explanation for why her account was terminated. She was told different things from different representatives. Some of the reason were using the same IP and computer as other Paypal users, selling yoga clothing at 20 to 30 percent lower than retail, and using multiple accounts She denies the latter.
Shbadan Akylbekov, the third plaintiff, said PayPal seized over $172,000 of his money. He used the account of a company his wife owns to sell Hyaluron pens, which are needle-less pens that inject hyaluronic acid into the skin. PayPal allegedly sent his wife a letter that says she “violated PayPal’s User Agreement and Acceptable Use Policy (AUP) by accepting payments for the sale of injectable fillers not approved by the FDA.” It also said that the money was taken from her account “for its liquidated damages arising from those AUP violations pursuant to the User Agreement.”
This is not a rare occurrence. PayPal has been freezing accounts for many customers in recent years. I had my account frozen about two years ago, but it only lasted a few weeks. One high profile case was American poker player Chris Moneymaker who had $12,000 taken from his account after six months of being limited. His money was retuned when he started asking people to join him in a class action lawsuit.