The prospective class action claims that PayPal regularly freezes users’ funds without explanation or a fast appeals process.
Three account-holders have filed a federal lawsuit against PayPal, alleging the digital payments platform violated anti-racketeering laws by freezing customer funds without explanation.
According to the lawsuit, PayPal, which has an estimated 325 million users worldwide, routinely puts “holds” of up to 6 months on accounts which allegedly violate provisions of its 65-page user agreements.
Bloomberg reports that the complaint was filed by two California residents as well as a Chicago businessperson. Collectively, the three claim that PayPal freezes amount to unlawful seizure.
Now, the plaintiffs are trying to have their lawsuit certified as a class action, potentially representing everyone who has ever had their funds frozen by PayPal.
“PayPal has failed to inform plaintiffs and members of the class of the reason(s) for the actions PayPal has taken, even telling plaintiffs and members of the class that they will ‘have to get a subpoena’ to learn the simple information as to why PayPal was holding, and denying plaintiffs, access to their own money,” the lawsuit states.
This is not the first time PayPal’s policies have put the company in hot water. According to Bloomberg, some of the platform’s better-known users have publicly condemned the company’s practices. Professional poker player Chris Moneymaker, for instance, threatened to sue PayPal after it allegedly placed a hold of $12,000 on some of his winnings.
“Anyone else that got funds confiscated by @PayPal feel free to reach out to my lawyers whom are starting a class action suit,” Moneymaker wrote on Twitter.
Just days after Moneymaker posted his tweet, PayPal “mysteriously returned his money.”
The current lawsuit contends that PayPal’s routine freezes amount to conversion, “the act of dominion wrongfully exerted over the personal property of another” person or entity.
Similar to other federal lawsuits filed against large corporations in recent years, the plaintiffs conversion claim cites provisions of the Racketeer Influenced and Corrupt Organizations Act. Frequently referred to by its acronym, RICO, the act was invented to prosecute high-ranking organized crime figures, such as those in the American Mafia.
The plaintiffs are seeking “damages and other relief” from PayPal.
“Plaintiffs bring this class action against Defendant PAYPAL, INC. (“PayPal”) to recover damages and other relief available at law and in equity on behalf of themselves, as well as on behalf of the members of the class defined herein… This action stems from Defendant’s widespread business practice of unilaterally seizing funds from its clients’ financial accounts, without cause and without any fair or due process,” the lawsuit says.
“PayPal places a “hold” on Plaintiffs’ own funds in their own PayPal accounts,” it adds. “PayPal has failed to inform Plaintiffs and members of the class of the reason(s) for the actions PayPal has taken, even telling Plaintiffs and members of the class that they will “have to get a subpoena” to learn the simple information as to why PayPal was holding, and denying Plaintiffs, access to their own money.”