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“Taking PayPal To Court”

By Bernd Schneider

For those whose claims against PayPal are below 5000 US dollars in value, it isn’t difficult in principle to sue the company. And it doesn’t have to cost much money.

Claims below 5000 US dollars can be brought to a Small Claims Court. One does not need a lawyer to take PayPal to a Small Claims Court, the proceedings are very affordable, and I have read posts of people who have won against PayPal in such courts without the assistance of a lawyer.

However, if you do want a lawyer, you can sue PayPal at a higher court. He may also be able to get a larger amount of damages, and he may agree to represent or consult you for a contingency fee (which means that he collects a payment from you only if you win).

You can claim not just the amount of money PayPal “restricted”, but also expenses and damages. So, even if the principal amount is small, taking PayPal to a Small Claims Court may result in a financial compensation which covers not just the “restricted” original amount but also the effort it took you to recover your money (which may or may not be higher than the principal amount). You can claim lost-income damages for the time you were preoccupied with attempting to recover your money, and if you suffered a nervous breakdown, you can put related expenses on the bill as well.

Every US county has a Small Claims Court. They are under the responsibilities of the Justices of the Peace; so, if your local telephone directory doesn’t have an entry for “Small Claims Court”, check under “Justice of the Peace”.

PayPal have their offices in Santa Clara County, California. You could proceed at a Small Claims Court in Santa Clara County, and PayPal would probably prefer that location. However, a suit can be filed not only in the county where the defendant is located, but also at a place where a service was performed, or was supposed to be performed. PayPal stress that they are not a bank, but an agent that delivers money from a sender to a recipient. If you have ever made a withdrawal from your PayPal account, a service chain has been established that reaches to the bank where you have the account to which you withdraw money from your PayPal account.

As a service has been performed at the county where you have your bank account, you can take PayPal to a Small Claims Court in the county where you reside, or, at least, where you have your bank account. This gives you a substantial advantage. If PayPal as defendant want to contest your case, they will have to send somebody.

You will need the following information when you file your suit: 1. Your name and address; 2. PayPal’s name and address (I am not quite sure whether their corporation is PayPal, Inc. or Confinity, Inc.; they are known as PayPal, Inc. but the WHOIS listing for the domain PayPal.com shows as registrant Confinity, Inc.); 3. the principal amount and the amount of expenses and damages you want to sue for; 4. a presentation of your case (it would be good to have this in writing, as it will enhance your chances of winning, if only because the presentation is likely to be more precise); 5. documents that support your claim (mostly electronic messages exchanged between you and PayPal).

It will only cost a small amount to process your case at a Small Claims Court. If you win, PayPal will likely have to refund this fee as well.

When you file your case, you will first have to deal with the clerk of court. A decision will not be made at the time you file your suit. PayPal as defendant will have to be invited for a hearing. You or your lawyer must be present at the hearing. If you aren’t (and aren’t represented by a lawyer) your case will be dismissed. If PayPal do not show up, the likelihood that the court will decide in your favor in a default judgment is pretty high. Whether PayPal attend or not, you will not have to be aggressive to win. It will be sufficient to be polite.

You should bring all relevant documents to the hearing. This should include printouts of all your unanswered mails to PayPal, as this will prove that they are non-responsive to a negotiated settlement. That they do not answer mail on your complaints will likely speak in your favor.

Posted: April 20, 2012 at 12:39 pm


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6 thoughts on ““Taking PayPal To Court”
  1. Susie Grogan on

    paypal is own by ebay,i call because there was over 600 plus taken out of my account ,i sell 5-700,00 for 2 months,and the thing is there was no money in my paypal account,i call both and was given the run around,i will not advice any one to sell for ebay,or paypay,the feeling i get is FRAUD’

  2. SilverShoes4you on

    You are correct Susie, paypal is a fraud and they make the bulk of their profits through scams. I’ve seen several people unsuccessfully try and sue their asses, I’d love to see someone make a buck off of them and WIN A SUITE!

  3. Cecilia on

    I need a lawyer against paypal. I am from area code 95131, san jose, ca.
    Pls. Advise. Thanks

  4. 'Angel' a concerned customer on

    I’m deeply disturbed, if not pissed, at the joint partnership between both EBAY & PAYPAL. Vendors as well as buyers should be given more payment options other than PAYPAL and not be or bullied/intimidated by the powers that be for doing so. I’m so fed up with receiving ‘phishing’ letters from them after making a payment telling me I either haven’t paid or worse, my bank has refused them funds. I think those that do such acts ought to be handed over and turned into shark-chum and then perhaps be given a fair hearing afterwards.

  5. Charles on

    I’ve had nothing but problems with paypal, I’m trying to pay my bills because I lost my job, and paypal is holding my funds until the beginning of the year? That’s so stupid.

  6. Ms Shirley on

    PayPal hold all my money in my personal and my own PayPal account ,the reason is “Risk Control”.This is terrible ! PayPal has no right to steal our wealth which belongs to our own.