Class Action Lawsuit Filed Against eBay for PayPal Holds

The law firm of Freed & Weiss LLC has filed a lawsuit against eBay and PayPal on behalf of their clients, Ronya Osman and Brian Patee. The lawsuit charges that PayPal’s practice of “holding” funds for up to 180 days in the accounts is fraudulent because of the “systematic and arbitrary manner in which the freezing is done and the lack of information shared with affected customers.”

The lawsuit claims PayPal is holding $1500 of Plaintiff Ronya Osman funds, and had held $750 of plaintiff Brian Pattee’s funds from about September 2009 til March 12, 2010.

The lawsuit says PayPal’s actions violate the Electronic Funds Transfer Act, stating that PayPal is a financial institution within the meaning of the EFTA, and that plaintiffs are consumers protected by the EFTA. “Defendant has been unjustly enriched at the expense of and detriment to Plaintiffs and the Class by wrongfully collecting money to which Defendant, in equity, is not entitled.”

The complaint is on the law firm’s website in PDF format ~

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One thought on “Class Action Lawsuit Filed Against eBay for PayPal Holds”

  1. Observations in light of my experience with the hold policy:
    The agreement (a contract of adhesion) appears misleading if not deceptive. It does not begin to disclose the burdens it may wreak on the new/infrequent seller. See my ‘community’ post on burdens. It should, at a minimum, inform new sellers that they WILL be subject to the policy and its damaging operation. The advertised reason is that new sellers are presumptively dishonest.
    Furthermore, it is patently false that held funds WILL be released three days after verified delivery. My experience proves this. They MAY be, but probably not.
    I pressed the PP folks on one particular hold on one particular transaction held 8 days after verified delivery. I wanted to get the reason and assumed one existed since it is their policy. An explanation was not forthcoming. If they can’t fully explain their own policy, how do they think it will be found enforceable? Holding funds 8 days past verified delivery seems to approach conversion?
    In light of the full detrimental operation of the policy on new or infrequent sellers, wouldn’t the agreement be found, under all existing circumstances, unconsionable?
    Considering its operation, what of social conscience? Moral obligation? Ethical considerations? As to the new seller, the held funds provide full protection for the buyer, yet the CEO takes credit for this protection. He makes a stated presumption that all people are generally good, yet forms policy on the presumption that all new/infrequent sellers are bad.
    Seems the EB/PP marriage has given him the license for undisciplined over-reaching. What of conflict of interest issues? Anti-trust issues?
    Integrity? PP collects a fee, however small, for charitable contributions.
    Prudent to attack at the state level as to licensure?

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