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PayPal customer account freeze lawsuit sent to arbitration

PayPal customer account freeze lawsuit sent to arbitration
The PayPal logo on a laptop computer arranged in Saint Thomas, U.S. Virgin Islands, on Saturday, Jan. 29, 2022. PayPal Holdings Inc. is scheduled to release earnings figures on February 1. Photographer: Gabby Jones/Bloomberg

PayPal Holdings Inc customers who accused the digital payment platform of violating racketeering laws by freezing their accounts with no explanation must first try to resolve the dispute in arbitration.

The customers are bound by the company’s User Agreement, which requires disputes to be resolved individually in arbitration, US District Judge Beth Labson Freeman in San Jose, California, ruled on Thursday.

“The court finds it important to note that plaintiffs could have opted out of the arbitration provision,” the judge wrote.

PayPal allows new customers to opt out of the arbitration clause by mailing in a form within 30 days of accepting the User Agreement.

The judge said she’d let the complainants file another action to confirm or vacate any arbitration award.

PayPal can freeze accounts for up to 180 days if it suspects the users violated the User Agreement by, for example, selling counterfeit goods or infringing copyrights or trademarks.

Two California residents and a Chicago businessman claimed in the lawsuit that PayPal’s hold on the money amounted to an unlawful seizure. The three sought to pursue a class-action lawsuit on behalf of all account holders who have had their money placed on hold.

The case is Evans v. PayPal Inc., 5:22-cv-248, US District Court, Northern District of California. BM



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