A lawsuit filed against PayPal in January of 2022 is going to be put in arbitration after a judge’s ruling. The lawsuit was filed on behalf of three plaintiffs who had funds seized by the online payment provider for allegedly violating the company’s terms of service via
online sports betting sites.
Without cause and without any fair or due process
In January of 2022, Lena Evans, Roni Shemtov, and Shbadan Akylbekov filed a case seeking class certification and remedies after PayPal seized tens of thousands of dollars from their accounts. A judge’s ruling has sent the case to arbitration, with the two sides being forced to settle the case in a private setting. This comes as a result of a motion filed by PayPal, that was met with objection from the plaintiffs who preferred to have their case heard in open court. Judge Beth Labson Freeman ruled that language in PayPal’s extensive terms of use that include various arbitration clauses as well as a waiver in the terms of use that strips all PayPal customers of the right to bring a class action lawsuit against the company in the event of a dispute as the reason for not allowing the plaintiffs to seek restitution for their seized funds in a courtroom setting.
In filing the lawsuit, plaintiffs accused PayPal of seizing funds under an “unlawful and unenforceable liquidated damages clause, which is a contract of adhesion, without any causal connection to any damages PayPal actually suffered, as a justification for its wholesale seizure of the entire balance of Plaintiffs’ PayPal accounts, and transferring said balance to PayPal’s own account, for PayPal’s own use, is inequitable and unconscionable, amounting to nothing less than a conversion of funds which do not belong to PayPal.” The complaint accuses PayPal of violating their contract with users as well as violating the Electronic Funds Transfer Act and the Federal Racketeer Influenced and Corrupt Organization Act.
Nearly $27,000 seized from a charity
The story of one plaintiff will give pause to anyone using PayPal for any type of gambling or charitable purpose. One plaintiff, Lena Evans, was a 22-year customer of PayPal. She mainly used the platform to buy and sell clothing on EBay, however, she also used her PayPal account to accept online payments for her non-profit organization Poker League of Nations which raised money to help women in need. Evans’ PayPal account was frozen in November of 2020, and in May of 2021 Evans learned that almost $27,000 that had been in the account had been seized by PayPal. She claims that the company never responded to any inquiries in regards to the seized funds and never offered an explanation as to why they had pocketed such a large amount.
The other plaintiffs in the case had more than $200,000 seized from their respective PayPal accounts, with both victims having similar experiences in regards to a lack of communication and explanation from PayPal about the seizure of their funds. Alleged infractions of these plaintiffs involve an accusation of one holding multiple accounts which the plaintiff denies, and the sale of a beauty product that has not yet been approved by the FDA.
Secrecy and strict rules about gambling
Large companies like PayPal typically prefer to take cases like these to arbitration, as the details and rulings are kept secret from the public and the outcome is not decided by an impartial jury of peers. This means we will likely never know the resolution of these particular cases.
We do know that PayPal has updated their policy on utilizing their services for gambling purposes, explicitly detailing prohibition of any and all types of wagering on
legalized sports betting
sites. Even something as simple as transferring $20 to a friend after a friendly wager on the home team is explicitly prohibited in PayPal’s Acceptable Use policy and gives PayPal the right to seize not only those funds, but all funds in the account regardless of whether or not they came from gambling.
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