Suing PayPal

This post was written by marc on July 7, 2004
Posted Under: Consumer Complaints,PayPal

Update on the PayPal situation. On June 13th PayPal closed my account because they didn’t like the material on my web sites. Yesterday I filed a small claims court case against them for $5000 – the mex you can sue for in California. Here’s the details of my encounter with them and there’s a recording of my phone conversation about their policies.

My suit is based on the fact that I have 50000 web pages that I need to change – and that I was actually in compliance with their policies, and that 10 cents a web page is reasonable consequential demages that should be awarded to me.

Like I said in my phone recording – I did get my money back that they froze for 180 days. I put the pressure on and they caved in. Got my refund check a few days ago.

What PayPal did was very slimy and I’m not done punishing them. I want to file another lawsuit for injunctive relief forcing them to reinstate my account and to force them to alter their User Agreement to something that’s legal. I live in the next county over from San Jose and I’m looking for a free lawyer to represent me and put PayPal in it’s place.

Reader Comments

Marc, I do not agree with you a very much. But, on this subject I am with you in the bunker. If I were a lawyer (wouldn’t be … they are mostly liberals) I would take your case. FIGHT ON!

Written By X-FREEPER on July 7th, 2004 @ 9:55 am

Freeper, guess what? I to agree with you. After reading Perkel’s first words on that issue, I went back and read Pay Pal’s user agreement. I dont’ know much legal jargin, but of what I understood, it just seems funny to me…

Written By charlie chingas on July 7th, 2004 @ 10:14 am

I am glad that you get your money back. I haven’t had any problem with Paypal myself. But you have make me close my Paypal account after listening to the tape of how Paypal treat their customers. So I have to thank you.

Written By Thomas on July 7th, 2004 @ 10:28 am

s/the mex you/the max you/;

Good luck, Marc!

I joined the PayPal boycott shortly after you posted all those “PayPal Sucks” links, and I found some alternatives. I occasionally donate small sums of money to dozens of particularized Web sites I like, and I am spreading the word that I’m no longer using PayPal.

The avalanche continues to grow.

Written By Alex Libman on July 7th, 2004 @ 2:51 pm

5000 webpages x 10 cents a page = 5000 bucks. Interesting.

Written By Virgo on July 7th, 2004 @ 4:29 pm

Marc, I sympathize with you on the money issue, but you weren’t in compliance with their policies. In your post on June 13, you cited what PayPal complained about – the pages containing links to escort service and adult content web sites sites – things that are specifically prohibited by PayPal’s Acceptable Use Policy.

Your page with advice for women about how to become prostitutes includes a link that says:

“If you find this information useful, please tip the author with PayPal”.

They’re not going to alter their User Agreement to allow that.

Written By MadBlue on July 8th, 2004 @ 12:15 am

So you’re going to sue them.

Is that what you’re saying?

You are going to file a lawsuit against them.

Is that what you’re saying?

You’re going to attempt a legal action against them.

Is that what you’re telling me?

Written By vorticanx on July 8th, 2004 @ 12:53 pm

My cousin and I were listening to the audio conversation that you had with PayPal and I was wondering about something. In the conversation it came out that the User Agreement includes a clause that says you can’t sue Paypal, even if it’s a legitimate claim. Later it was mentioned that they hold your money for 180 days for chargebacks. Why bother? No one can sue PayPal for NOT issuing chargebacks in the first place(due to their User Agreement). Perhaps I’m wrong about this. Please let me know. Anyway, I still think that PayPal is just trying to squeeze that last penny from you before you leave them dry (not a Banking serviced Company?? BullShit! I bet, that they ARE taking your money and making some last minute investments with it.)

Written By Trevor on July 12th, 2004 @ 12:43 am

Yeah! Fuck them!

Srbija do Tokija!!!
PayPal sucks!

Written By Sasha on July 12th, 2004 @ 6:47 am

Yeah! Fuck them!

Srbija do Tokija!!!
PayPal sucks!

Written By Sasha on July 12th, 2004 @ 6:47 am

I hope the judge throws the case out. YOU AGREED TO THEIR TERMS! If you sign a contract that says, “I give paypal my money and they can cancel my account at their discretion and keep my money for 6 months,” then BOOM! You’re stuck. This seems to me like a case of you not reading the license agreement (like most people don’t) and it actually coming back and biting you in the ass. Whoopsie.

Written By Mance on July 14th, 2004 @ 10:47 pm

1) Every company has the right to choose who they will or will not do business with, just like every person has the right to choose what company they will or will not do business with. If PayPal chooses not to do business with people who provide links to adult services, that is their right. It may make them prudes, but it doesn’t make them criminals.

2) As far as I know, every credit card company has the exact same policies regarding chargebacks and holding funds as PayPal. It is standard business practice. If you’re going to sue PayPal for this, you better sue Visa, MasterCard, American Express and Discover, too. And even if it weren’t standard practice, you agreed to it when you signed up; if you didn’t read the member agreement, that’s your fault, not theirs.

3) In short… Grow up! Don’t waste a judge’s time with your juvenile, whiny bullshit. Start taking some responsibility for your own choices. Sheesh.

Written By cfc on July 26th, 2004 @ 2:11 pm

Paypal recently took $415.00 out of my account stating that the person who paid me violated the agreement with a fraudulent bank account. They said that I am not eligible for protection because I didn’t have a signature receipt for a trans over $250.00. Now the agreement says you “should” have a signature receipt, not that you have to have one. Plus the owner of the bank account told me that Paypal screwed up and he is fine. His account is confirmed, Paypal let him on their service. Do I have any course of action. I am boycotting Paypal, and now Ebay because of this and I hope the company rots in hell.

Written By Nick on August 12th, 2004 @ 5:10 pm

What’s with this ‘virgo’ person ragging on your math ? Your details clearly state 50000 x .10 being $5000. Sorry about my peeve. It just pisses me off when people go out of their way to show their stupidy.

Written By ihatedumbfucks on May 14th, 2005 @ 9:44 am

Nick, Email me about this problem, I have the same exact one 🙂

Written By Ang on September 13th, 2005 @ 5:37 pm


Written By JENNIFER on October 30th, 2005 @ 2:58 pm

I have been screwed by paypal also. I was trying to start a small business, as I am unable to work outside the home due to a liver disease. An unsatisfied buyer indicated I misrepresented an item and paypal, without hearing my side of the story, as I did not receive their emails, awarded in her favor. They refunded her the full amount and froze my account. She also kept the merchandise. In the meantime, since there was not enough in my account to cover what they gave her, any money sent to paypal by other customers will be sent to the Lying buyer. I cannot print postage, I cannot change my description to indicate I do not take paypal on ebay, since there are bids. So now I will receive bad feedback and it will seem that I kept buyers money and did not send merchandise. I called them, and they really dont care. They said that since I had a previous problem (over a year ago, with shipping) that that counts against me and they decided to award in the lying buyer the money. So now I will not be able to sell on ebay, will lose my business, etc. I dont know what to do.

Written By colleen on April 7th, 2006 @ 6:50 am

i would like to sue paypal as well. can i be involved in this case? someone contact me! thanks. rhonda,

Written By Rhonda on June 9th, 2006 @ 11:00 am

i live in canada i had over 2000 in my accont and paypal froze my accont and its still frozen affter i sent them many fax’s they still say they never got them yet i had my bank fax them and was given a print up from the fax saying receved i’d also like to get in on the law suit

Written By cory on October 17th, 2006 @ 8:43 pm


i have problems with paypal to!
they blocked my account and refunded over 4000$.
i contacted most of those ppl and they did not receive the money on their account!
so i called paypal again, and they said that my only business is to clear the dept on my account, and not to worry about other ppl their accounts… WTF?!?
i got a deal with my buyers that if they get the money back, they will send it directly to my bank account.
not my business???

i guess that paypal is stealing from all of us.

Written By GHOST on December 4th, 2006 @ 4:00 am

PayPal asks for you bank account information to verify your address… beware

I opened a bank account for this, submitted that information and resumed shopping. They automatically by default charge your bank account!!!!!!!
I have 15 NSF’s on my account!!!!!!!!
It doesn’t even tell you there are no funds right away.. It just says payment complete!!! If it gave you a heads up, you can correct the problem.. I only use my Credit Card to buy things.. By the time I was aware… It kept automatically doing that to the rest of the items I bought!!!!!!!!
I have $580.00 is NSF fees all because that is their policy…
I am trying to get reimbursed for this. Lets see how PayPal resolves issues like this which their “system”


I got off the phone with PayPal a few minutes ago.
I encountered the rudest person I have ever spoken to. His name is Clarence. While I was trying to explain to him my concern, he cut me off several times speaking over me and told me I should have read their policy and that this is how it is. NEVER A SOLUTION JUST A POLICY.
He repeated the same thing to me more than 8 times and when I asked to stop and listen for a second.. He said have a nice day and hung up!!!!!!!!!!!!

PayPal, may you lose all your business because you are garbage, when a customer is speaking YOU LISTEN. THAT IS HOW YOU UNDERSTAND WHAT I AM ASKING. You have no customer service, its just a generic line you tell all your customers, THIS IS OUR POLICY. I hope you choke on it.

Don’t make the same mistake as me, PROTECT YOUR DIGNITY, ALWAYS GET THE NAME AND AGENT NUMBER WHEN YOU SPEAK TO PAYPAL. I hope that person never works in customer service again.. I will try to give PayPal as much information about the conversation, I have his name and the time. I hope the call was really recorded.

That was no way to speak to anyone. VERY DISRESPECTFUL


That’s the whole reason why PayPal asks for your bank information. It is not for “verification” reasons.
It is to make you slip up and pay with your bank account so that PayPal pays no credit card fees and has no chargeback risks.

It works! Lots of people are fooled this way.

I can understand that. That is business, cut costs but…

What are they doing to correct their “system” that can’t stop the transaction and all your “completed payments” keep trying to pull the funds from your bank account??????

Really sad setup…

an anyone tell me where to turn to sue PayPal regarding this matter in Vancouver BC Canada?

Written By Alex on December 8th, 2006 @ 4:11 pm

I recently had paypal freeze my account of $2600 CAD.

They told me they wanted to make sure i had the items which i sold, I sold 4 items.

3 of them had already been signed for with a tracking number saying recieved and the 4th was recieved 2 days after the freeze.

I have proved to them several times that my customers recieved the items they purchased with proof from xpresspost, UPS, and FedEX, The items were also insured and signed for upon receipt.

Still Paypal chooses to review my case and has no idea when they will get around to reviewing it.

I have contacted a newspaper and intend on hurting them where it hurts most, market share.

Short your ebay stocks. and lets make some anti paypal bumper stickers like they do for oil companies.

Please contact me if I can help you with your cause.

-Jonathan Monahan

Written By Jonathan Monahan on December 22nd, 2006 @ 7:51 pm

I too got stiffed by paypal. A total catch 22 and there is nothing I can do about it . It says to unfreeze my funds $1000+ I have to complete a checklist. 3 of the checklists are not possible to complete

*** the paypal bug or scam or whatever you want to call it ***

one asks me to provide shipping info and proof of shipment for items even though nobody ever made the slightest dispute about me and the catch is there is no field to provide the info, it just says fill in the field belows * BLANK * . 100% bad business here..

two asks me to provide business info, huh ? I’m just a private guy with 15 feedbacks, what business info ? once again there is nowhere to provide the info anyway, just a button that says edit and cancel that take you to the same page.

three asks me to provide the names and numbers of my suppliers. again a gross statement from paypal. who are my suppliers ? I have under 20 paypal transactions total and even if I had suppliers what right does paypal have to freeze my funds and ask for that after, sure if you need references before activating and account I can understand that but you cant take $1000 and ask for references after.

I wrote any type of terms similiar to this in my auction I can basically hide behind terms and do a lot of bad things. It is obvious many people will not return to claim their funds and paypal will keep it.

I really think the time is up for suing paypal and running complaint sites, the DOJ needs to step in and crush this scum of a company.

Written By GR on January 7th, 2007 @ 11:54 am

i have an on going prob with pp, when i tried to transfer money from pp acc to bank acc, was greeted with err “this bank acc is closed”, well the same amount only arrived in pp acc that day from same bank. anyway cutting it short, i couldn’t get pp to do transfer, but because i’d done it via direct debit, i rang my bank, explained to them an asked them to claw it back under the “direct debit guarantee scheme” no prob my bank said, it’ll be back in your acc by tomorrow got me money back, canx the debit an just to be safe, asked my bank to send me another debit card (told em it didn’t swipe properley) new card-new cfd number on back, no one can take anything from it.
p.s. it aint over yet,they trying to get me to pay “failed transfer fee” because of there error, i think not. i’m letting them proceed with legal action. it’s easier for me, and i’ve got all mail to and from them.i know it’s too late for some guys,fortunately for me, i don’t really rely on pp. but hopefully this info will help some others, b4 they fall into the land of automated e mails.

Written By mikey on January 8th, 2007 @ 2:38 pm

I was having the same problem. I sold about 20 items on ebay. All shipped but they still need me to fax over my personally infomation which i did. After calling them for several times . They finally unfrreeze my account. But as soon as i try to withdraw the funds, they freeze my account again and asking me to prove inventory for items which already delivered and wants to know where i purchases my products. This is really bad business practices. I too like to sue paypal.

Written By Tom D on August 14th, 2007 @ 3:39 pm

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