PayPal faces lawsuits for freezing customer accounts and funds

Three PayPal users who allegedly saw their accounts frozen and funds withdrawn by the company without explanation have filed a federal complaint against the online payment service. The plaintiffs – two users from California and one from Chicago – accuse the company of illegally seizing their personal property and breaking racketeering laws. They are now offering a class action suit on behalf of all other users who have ever had their accounts frozen and are seeking restitution, as well as punitive and exemplary damages.

Lena Evans, one of the complainants who had used PayPal for 22 years, said the website seized $ 26,984 from her account six months after it was frozen, never telling her why. Evans used PayPal to buy and sell clothes on eBay, to exchange money for a poker league she owns, and for a nonprofit that helps women with various needs.

Complainant Roni Shemtov said PayPal seized more than $ 42,000 of her money and never got an acceptable reason why her account was closed. She received several different explanations when she contacted the company: A customer representative said it was because she was using the same IP address and the same computer as other Paypal users, while a another said it was because she was selling yoga clothes 20-30% less than retail. Another rep allegedly said it was because she was using multiple accounts, which she denies.

Shbadan Akylbekov, the third plaintiff, said PayPal seized more than $ 172,000 of his money without giving him an explanation as to why the account was limited in the first place. Akylbekov used the account of a business owned by his wife to sell Hyaluron pens, needle-free pens that inject hyaluronic acid into the skin. After the money disappeared from the account after a six-month freeze, PayPal reportedly sent his wife a letter saying she “violated PayPal’s Terms of Service and Acceptable Use Policy (AUP) by agreeing to payments for the sale of injectable fillers not approved by the FDA. “He also stated that the money had been taken from his account” for his damages resulting from these violations of the AUP pursuant to the contract of ‘use”.

PayPal has long angered many users for limiting their accounts and freezing their funds for six months or more. One high-profile case was that of American poker player Chris Moneymaker who had $ 12,000 withdrawn from his account after six months of limitation. Moneymaker was already in the process of ask people join him in a class action lawsuit before his funds are “mysteriously returned”.

Part of the complaint reads as follows:

“The plaintiffs bring this class action against the defendant PAYPAL, INC. (“PayPal”) to recover damages and other remedies available at law and in equity on their behalf, as well as on behalf of the class members defined herein … This action arises out of the Defendant’s widespread business practice of unilaterally seize funds from the financial accounts of its clients, without cause and without any fair or due process.

PayPal places a “hold” on applicants’ own funds in their own PayPal accounts. PayPal has failed to inform the plaintiffs and class members of the reason (s) for the actions PayPal has taken, even telling the plaintiffs and class members that they “should get a subpoena” as to why PayPal withheld and denied applicants access to their own money. “

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