PayPal is facing a class-action lawsuit alleging that the digital payments company violated racketeering laws by freezing customer funds without offering an explanation.
When users contacted PayPal about the frozen funds, they were told they had violated the company’s “acceptable use policy” but weren’t told how that violation had occurred, the lawsuit says. What’s more, it alleges that in at least one instance, PayPal said that a user would “have to get a subpoena” to find out why.
It also says that PayPal takes the money for itself after a 180-day hold period. “PayPal’s user agreement and acceptable use policy cannot be used as a ‘license to steal,’” the complaint says.
The three lead plaintiffs claim they had nearly $250,000 seized by PayPal. One plaintiff, Shbadan Akylbekov, ran a storefront selling hyaluron pens, which are filled with hyaluronic acid, a dermal filler that is used to reduce wrinkles. He said that PayPal took $172,206.43 from his wife’s account, which he used for his store, with no explanation. After numerous calls and letters to PayPal, he was finally told that the seizure was “for its liquidated damages arising from those [acceptable use policy] violations pursuant to the User Agreement.” He claims he never received a copy of that policy until his account was restricted.
Later, PayPal said it used those funds to reimburse customers who had purchased hyaluron pens from his store. Akylbekov followed up by asking to see documentation of the customers who requested refunds. A PayPal customer service representative said the report would be available within two days, but Akylbekov says he still hasn’t received it.