- Aug 17, 2014
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.
“PayPal violates its own Agreement by failing to provide adequate notice to users whose accounts have had holds placed on them,” the lawsuit says. When PayPal does let users know it placed a hold on their funds, “it does not inform such users why such funds are being held, how they can obtain a release of the hold, and/or how they can avoid future holds being placed on their accounts.”
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.