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Judge Says Paypal's Arbitration Rules Unfair 237

Posted by timothy from the tails-you-lose dept.
MooRogue points to this article in today's San Francisco Chronicle, which reports U.S. District Court Judge Jeremy Fogel's ruling that Paypal "attempts to isolate itself from challenges," noting "Judge Fogel also refused to dismiss the class-action lawsuit going against Paypal." I guess I've been lucky with PayPal so far, but I know a few people who haven't.
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Judge Says Paypal's Arbitration Rules Unfair More

Judge Says Paypal's Arbitration Rules Unfair

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  • Paypals response: (Score:5, Funny)

    by geekoid ( 135745 ) <dadinportlandNO@SPAMyahoo.com> on Monday September 09, 2002 @07:46PM (#4224347) Homepage Journal
    "This is totally unfounded. Just because people use our system, doesn't mean we need to bear any responsibility for what goes on with are system! Jeez, you people are all acting like money is important and should be regulated..."

    • Re:Paypals response: (Score:2, Interesting)

      by iamplasma ( 189832 )
      Does it occur to anyone that this was basically exactly the argument that Napster was running, in that they weren't responsible for the use of their system? I seem to recall at the time that /. thought it was the best argument ever, or does the strength of the argument depend only on if /.ers are getting free stolen music from the arguer? I mean at least Paypal has a largely legitimate business going, unlike Napster which was founded upon the supposed "abuse" of the system.

      Oh, and before you mod me as Flamebait, I want to point out that this is a genuine opinion, and not just something intended to tick people off. I'm just saying that you have to either accept or reject (IMHO reject) that line of argument, you can't accept if just for those you like and reject it for others.

      • Re:Paypals response: (Score:4, Insightful)

        by Fesh ( 112953 ) on Tuesday September 10, 2002 @06:13AM (#4226541) Homepage Journal
        I'm not seeing this point brought up, so I'll go ahead and air it. The difference is that PayPal is a bank, whether they like it or not. They store money for you. They make it convenient to pay for things without using cash. A bricks-n-mortar bank would be screwed on so many different levels if it behaved like this, why is PayPal any different?
        • Amendment: I didn't see the point brought up in this thread. D'oh. 'S what I get for reading at 1+/highest first/nested, I guess.
        • PayPal is NOT a bank. They are more like the digital coffee can in your backyard that you bury money in until you decide to do something with it. If you want to use a bank go use a bank, if you don't then stop bitching and enjoy the benefits of not having to use a bank. You know when you sign up that they aren't a bank and are not federally insured and so forth so if you don't like what you get then stop complaining.

          For my part I love PayPal. They've never screwed me over in the slightest. They've answered questions when I've asked. They give relevant information for tracking my money. All things I've never had any bank do better for.
      • I seem to recall at the time that /. thought it was the best argument ever, or does the strength of the argument depend only on if /.ers are getting free stolen music from the arguer?
        I'm just saying that you have to either accept or reject (IMHO reject) that line of argument, you can't accept if just for those you like and reject it for others.

        How many hundred thousand people have /. accounts now? You do realize that not everyone on here has to have the exact same opinion. Some people on here could post that they thought it was the best argument ever during the Napster days, while others can post here now and say that it's a weak defense on the part of Paypal.

        I'm not trying to flame you specifically, but I get tired of hearing this complaint. I don't remember signing away my freedom of thought when I signed up for /.

  • obligatory link (Score:4, Insightful)

    by packeteer ( 566398 ) <packeteer@sub d i m e n s i o n . com> on Monday September 09, 2002 @07:49PM (#4224368)
    www.paypalsucks.com [paypalsucks.com]
    • also: paypalwarning.com [paypalwarning.com].

  • Another Article, Same Jist (Score:5, Funny)

    by Murdock037 ( 469526 ) <tristranthorn@ho ... .com minus berry> on Monday September 09, 2002 @07:49PM (#4224370)
    Nice to see Slashdot isn't getting more than a few stories a day from the Register at this point.

    But just in case you love the vulture, they still beat 'em to it:

    http://www.theregister.co.uk/content/6/27028.htm l
    • It's the shame they deserved. There are hundreds of submitted stories at any given time and they don't take them seriously.

      It's not the first time they rejected my submission in just few minutes only found it reapeated in /. headlines a few days later from different submission. They simply don't spend time verifying the news, thus lost the first hand on them.

      Call me a whinner, but I'm sure a lot of us has the similar experience. If /. editors keep treating submissions like dirts, fewer and fewer people would care to submit.

      You can mod me down now, but please think about it. I personally hate to see /. being down to a Register redirector.
      • Call me a whinner

        You're a whiner who can't spell.

        It's inevitable that the vast majority of submissions will get rejected, however good. Reason #1, 2 and 3: there are too many. Reason 4: Different editors, different preferences. Reason 5: They are human, they are fallible. Reason 6: Number of submissions can be used as a crude barometer of community interest. Reason 7: No-one is putting a gun to their head and forcing them to break a story first - it's their perogative to wait a bit, change their minds, wait for confirmation, etc.

        Do I need to go on? I think not.

  • Is Ebay a bank? (Score:5, Insightful)

    by MrCaseyB ( 200218 ) <casey_slash@luxC ... m minus language> on Monday September 09, 2002 @07:50PM (#4224372) Homepage Journal
    I thought I remembered a story about a decision that would make ebay follow all the rules and regulations that traditional banks follow. What was the outcome of that and would that have prevented ebay from being able to screw people like this? IS Ebay even FDIC insured?
    • Banks aren't required to be FDIC insured. Its an optional service of the Federal Government.

    • Re:Is Ebay a bank? (Score:4, Interesting)

      by NineNine ( 235196 ) on Monday September 09, 2002 @08:06PM (#4224464)
      Actually, I'm thinking about PayPal. Either way, it's a moot point now. It already came and went. EBay/PayPal won. It was ruled that they're not technically a "bank", and so they don't need to be regulated.

      Essentially, when you put money into EBay/PayPal, you're taking a gamble that you're gonna get it back. No FDIC insurance there. Hell, not even any regulations that say that they have to keep xx% of cash on hand. If there were a run on PayPal/EBay (ie: a lot of people withdrawing cash), I seriously doubt they'd be able to handle it. In fact, that's a good idea...

      Somebody needs to organize a day when as many as people withdraw cash from PayPal. When they bottom out, that'll get the Fed's attention.
      • You need to get people to deposit their Paypal dollars with you. You offer them say 6% interest. As soon as you get any paypals you redeem them for USD$ This action puts pressure on paypal to keep coming up with cash. Eventually they have to devalue their currancy. When they change the exchange rate to .8 USD$ to 1 Paypal you buy back paypals and restore everyones account. This is how George Soros made over 1 billion USD$. Instead of paypals he did the same thing with 3rd world currencies

    • Re:Is Ebay a bank? (Score:3, Insightful)

      by Zeinfeld ( 263942 )
      What was the outcome of that and would that have prevented ebay from being able to screw people like this? IS Ebay even FDIC insured?

      FDIC insurance is irrelevant unless eBay (owner of Paypal) goes under. FDIC insurance is not a requirement to perform bank functions, but federal regulation is.

      I don't see why Paypal is not subject to the same rules as any other bank or money transfer agent. Nor do quite a few state attorney generals. If you take money from consumers and hold it in accounts the Federal Reserve regulations apply to you, period, end of story.

      This case is rather more interesting, the judge essentially threw out the mandatory arbitration claim as being, well arbitrary.

      Contracts should not trump the law. It is one thing for two companies negotiating a million dollar contract to agree to be bound by arbitration, it is quite another for a company to unilateraly impose terms on consumers.

      Of course extreeme Randite Libertarians will blather on incessantly about 'rights' however this is one case in which the law is defined empirically. The law is what courts rule it to be. Courts have refused to uphold contract terms that usurp the common good since the days of Claudius.

  • Federal small claims (Score:5, Insightful)

    by jbolden ( 176878 ) on Monday September 09, 2002 @07:50PM (#4224374) Homepage
    For local cases small claims courts work really well. Generally for about $25 you can file, there are no lawyers, the case takes place within a month of filing, the judge hears both sides and the thing is over in less than 15 minutes. Suprisingly often once you "sue" in small claims court you can get the other side to actually negotiate in good faith.

    With the internet there is a great deal of "mail order" type business going on for a county based system to work. But the system itself works pretty well. I don't see any reason the Federal Government couldn't set up an internet based small claims court under the interstate commerce clause. Also maybe raise the limit to say $25k. For large cases hiring an out of state lawyer to handle a suit is not unreasonable its insane for small cases and there are lots of small cases.

    • If the issue is with PayPal, you forgo your right to sue for "binding arbitration" (read:a private court that will almost certainly be in PayPal's favor), IIRC. Hopefully, the class action suit will put an end to that nonsense.

    • A few things to cover. (Score:3, Interesting)

      by DiveX ( 322721 )
      After the thread regarding junk faxes/telemarketing calls a few weeks ago, I am happy to say I won my first case. The company I was going to sue over a prerecorded call agreed to pay $300 plus a promise to never call again.

      However a few things are incorrect in your statement. Filing fees can vary greatly. In my county, for a claim of less than $100, there is a $79 fee. For anything between $100 and $5000, it is $96 (I know, strange but true). In several states, you are allowed to have a lawyer represent you, so it isn't just person vs person, although the judge may provide you with a lot more leeway. I now have one suit pending and am prepared to file another if they do not meet my demands within another week. Judgement is the easy part, collecting can be impossible.
      • You can alway hire a collection agency to hound them, or hire an off duty police officer to serve the court judgement. If they don't pay they will be in contempt of court and you can file a complaint. Of course how far you'll be willing to take it generally depends on the amount of money or anger involved.
      • Good for you! I'm glad to hear you were successful in winning your case. Now you have me curious though.... I have no idea what the filing fees are for my county. I'm also wondering how you managed to track down enough information on the company soliciting you to bring them to court?

        I've had several illegal telemarketing calls from those automated dialers that play a recording - but my caller ID box typically shows a bogus number. (Often, it shows the name and a number for a company that manufactured the dialers!) I guess I could "play along" and leave my info at the beep, hoping I could pry the info out of whoever calls me back trying to complete the sale.... but I haven't gone that far yet.

  • PayPal... (Score:5, Interesting)

    by ak_hepcat ( 468765 ) <slashdotNO@SPAMakhepcat.com> on Monday September 09, 2002 @07:51PM (#4224375) Homepage Journal
    I've used PP a few times, and it's gone pretty well for me. I've never 'deposited' money in them, mostly because I realise that *** They Are Not A Bank ***, just a western-union house. If only western-union didn't charge as much money for money-transfers, they could take over the paypal market. ($18US for a $40US transfer. Hello? Can you say unreasonable markup?)
    • I'm pretty sure WU's costs are much higher than PayPal's. WU has physical offices around the world, and that's not cheap. WU's only mistake was not taking their business model online before PayPal did. Now that they've missed the boat, they're probably not interested in even trying.
    • If only western-union didn't charge as much money for money-transfers, they could take over the paypal market.

      www.bidpay.com [bidpay.com] - by Western Union - only charges $3 to send small amounts of money anywhere. I don't usually use them, but they were the only way I could get money to one Estonian seller.

  • not a troll but (Score:3, Funny)

    by evacuate_the_bull ( 517290 ) on Monday September 09, 2002 @07:51PM (#4224376)
    mentioning paypal on slashdot is almost worse than mentioning MS....this is going to get ugly
  • route all your paypal transactions through online gaming. have people deposit money into gambling accounts and then withdraw into paypal.

    paypal legally can't charge fees on money accepted from gambling sites... so they don't.

    i save a lot of money this way.
    • Yes, I can see how that would save you money. If only it weren't counteracted by the fact that all gambling providers (both physical and online) will _always_ make money off of you (in other words, you will lose money). While it's smart to save some $$ when you do win, wouldn't you be better off not purchasing the services of the gambling industry in the first place?
      • ... well, first off, if money was deposited and then instantly withdrawn, i wouldn't lose money.

        second, i do this on poker sites. poker is a skill game, i have a positive expected return.

    • Re:new paypal scheme... (Score:1, Insightful)

      by Anonymous Coward
      I'm not sure I understand how that works? Someone wants to pay your $500 via Paypal. What exactly is a "gamling account" and how would someone deposit it there? Thanks.
  • by doing this, it greatly reduces the strength of a EULA i would think...clickwrap's value as a legal tool is being shown here as not being what companies would like it to be, which is good considering the draconian things they put in them...i seem to recall one a while back where the eula said you could not write an unfavorable review of the software....
  • Visit PayPalSucks.com [paypalsucks.com] for an entire community pissed off at PayPal.com's practices.

  • no prob here (Score:3, Interesting)

    by greymond ( 539980 ) on Monday September 09, 2002 @08:02PM (#4224438) Homepage Journal
    I've been using paypal constantly with ebay - both selling and buying - I even take donations via paypal on my website. I havent had a problem with them at all. I read through some of the old slashdot's on this and it seemed that people who had LOTS of money (ie: more than 1 grand) in there PP account somehow got fucked over but the people like myself who have $100 or less in there at any given time are left alone just fine. Maybe this is something the conspiracy people should look into - like maybe paypal fucks with the people who put alot of money in there at once because they know they can get away with it because the majority of people who run small amounts won't complain and will stick up for PP.
    • that logic seems backwards. If you put $10,000 in a pay pal account, you have $10,000 to throw around, probably more, and can afford a lawyer.

      If $25 goes missing or gets frozen, it's probably not worth your time to bother.

  • PalPal democratizes taking credit cards (Score:5, Informative)

    by gentlewizard ( 300741 ) on Monday September 09, 2002 @08:02PM (#4224439)
    I used PayPal earlier this year to accept credit card payments for a seminar I co-produced. It all went very smoothly: following the instructions in their online manual, I was able to add the Paypal button to my website and also pre-populate the signup form for new PayPal users.

    Best of all, the fees were only $0.30 plus 2.9% per transaction, with no monthly minimum, terminal fees, etc. like with a standard credit card processor. This page [paypal.com] at PalPal shows the comparison.

    To me, this means that accepting credit card payments is not just a privilege of those who can "qualify" at a bank, but available to anyone with just a painless web signup. And the fees are less too.

    If PayPal can ever get its customer service act together, it will really give banks a challenge. The credit card processors don't care: they're getting huge traffic from PayPal.
    • Absolutely! That's why I use them --- it makes taking credit cards painless. I don't keep much in the paypal account, so I'm not out much if some turkey manages to get it frozen somehow...


    • I thought it was the 38 Special that democratized taking credit cards.

    • The problem is that PayPal wants direct access to your money. They want to keep your credit card number on their computers - I don't have a problem with their security, but the less security you NEED, the safer it is. This of course requires extra checking, so it would take me 3 weeks from signing up to being able to pay.

    • Re:PalPal democratizes taking credit cards (Score:5, Informative)

      by Bagheera ( 71311 ) on Monday September 09, 2002 @09:43PM (#4224895) Homepage Journal
      To me, this means that accepting credit card payments is not just a privilege of those who can "qualify" at a bank, but available to anyone with just a painless web signup. And the fees are less too.

      One of the issues that has been brought up is that PayPal is NOT more economical than a merchant account. You reference their site, and I honestly wish I could find a good merchant account link - but I know from friends in business that the transaction fees are less than 2.9%.

      While the point of qualification may be valid (there is none for a paypal account) the "savings" are non-existant for most business users. And, to be quite honest, it's not that difficult to qualify for a merchant account. A friend of mine started her business on-line with a merchant account and no real credit after a bankruptcy.

      The real issue is that PayPal is NOT a bank, does not have the oversite that a bank does, and makes it so they can screw their users if they feel like it. The Judge in this instance has stepped in and told them "No, sorry, you aren't going to keep screwing your users."

      Good for the Judge.

    • "PalPal democratizes taking credit cards"

      First off, I just have to say how I laughed at that title. That's like saying Lenin democratized Russia. Replacing one oppressive regime with another doesn't change anything. PayPal just makes sure everybody is oppressed evenly.

      "Best of all, the fees were only $0.30 plus 2.9% per transaction, with no monthly minimum, terminal fees, etc. like with a standard credit card processor. This page [paypal.com] at PalPal shows the comparison."

      That's all well and good, but my problem (well, one of them at least) is that they charge per-dollar to begin with. For most normal bank transactions, you are charged per-transaction, not per-dollar, and it's only with credit cards do we see this baseless pricing racket put in place. I mean, it't not like transferring $100.00 requires ten times the amount of bits to move through the wire than $10.00.

      On top of that, it takes them several days to transfer money to my checking account, but they can take it from my account "instantly?" Why does it work that way? Maybe so PayPal can skim a little interest off the transaction on top of the transaction fees? Charging me twice, are they?

      I live in Louisiana. My bank is in Texas. When I sell things on eBay, often times when a person mails me their check and I mail the check to my bank, it takes less time to get my money than it would have taken through PayPal.

      "To me, this means that accepting credit card payments is not just a privilege of those who can "qualify" at a bank, but available to anyone with just a painless web signup. And the fees are less too."

      The problem aren't the middle-men who set up the transaction services, the problem goes much higher than that, rooted in the oligopoly that the credit card industry has become. Look at the recent legal troubles Visa and MastarCard are finding themselves in.

      "If PayPal can ever get its customer service act together, it will really give banks a challenge."

      It will be a cold day in hell before most banks can challenge my bank [usaa.com] as far as I'm concerned. And PayPal has a long way to catch up with normal banks.

      Just as an example, most banks don't make you sit through click-through ads before you can access your account. If that's not outright contempt for their customers, I don't know what is.

      I have so much more respect for Citibank and c2it [c2it.com] at this point that it's not even funny. Seriously. Large uber-corp offering a better service at a better price than some dot-bomb start up. Go figure.

      • I live in Louisiana. My bank is in Texas. When I sell things on eBay, often times when a person mails me their check and I mail the check to my bank, it takes less time to get my money than it would have taken through PayPal.

        Then use Western Union's Bidpay service [bidpay.com], as another poster in this sid pointed out. Bidpay will mail you a money order.

        • "Then use Western Union's Bidpay service [bidpay.com], as another poster in this sid pointed out. Bidpay will mail you a money order."

          First off, they're rather expensive compared to simply getting the money order yourself. While a WU money order form the local Winn-Dixie costs around $0.75 (if I remember correctly), they want to charge $3.00 on their website. Even USPS Pay@Delivery is cheaper than that ($1.00, making it cheaper than mailing a USPS money order through first class mail), and it has the added gimmick of not paying me until the package is delivered.

          Second, I have no problem with personal checks, and they're about as ubiquitous as cash in the US. And the customer can usually get the check out to me before WU gets off its rear end and processes the information.

          However, I'll keep that in mind for the occasional European buyer I get. "Personal cheque? What's that?" "What is this 'domestic money order' you speak of?" The usually end up wanting to pay in cash (which, aside from doing me no good, is usually quite illegal).

          Although I can't really blame them for not wanting to use cheques any more. I've seen a few examples of UK cheques and, while the average US personal check has more safety features than your typical $20.00 bill, my three-year-old niece could probably forge a UK cheque.
        • No, wait, European buyers don't seem to use credit cards, either. Which now makes BidPay completely useless to me.
      • it't not like transferring $100.00 requires ten times the amount of bits to move through the wire than $10.00

        No, but it is ten times the risk. The bank is lending out money, usually at a very short term rate. They have to make the money somehow, and also cover their asses in case the debt goes bad (what happens if you never pay back that $100? I've worked in the high risk credit industry -- 10-15% chargeoff is par for the course).

        Not cheering or jeering Paypal here, just pointing out some economic realities.

  • What more can you expect from a company that (Score:3, Informative)

    by tcc ( 140386 ) on Monday September 09, 2002 @08:05PM (#4224459) Homepage Journal
    Doesn't delete your account even if you specifically ask them to do so after many emails, fax, etc... and if that wasn't enough, they still spam you with their newsletter and promotion...

    I mean, it was one thing that they didn't give me that 5$ credit when my friend added himself, and sent them a message to confirm that he got refered by me, but blattantly spamming and keeping your information in their database like this even after repeated requests is just plain wrong.

    At least I'm lucky, I didn't do the mistake of running a merchant service with them, especially after all the horror stories I've heard.

  • Let's make PayPal Open Source! (Score:1, Funny)

    by Anonymous Coward
    I mean, who else but the experienced and well-travelled Open Source developer community would be better qualified to improve a system such as PayPal?

    Arbitration could follow a similar methodology as the one implemented for GPL infractions in public projects.

    The reliability and trustworthiness of PayPal would be greatly enhanced by having the honest, dedicated, and hard-working developers of the Open Source community oversee and develop a new PayPal system.

    Only when we encourage the Open Source community of developers to follow their dreams can we seize control back from entities such Citibank.

  • However, I NEVER leave money in the paypal "account"!!!!!! Use it for what its for, sending/recieving money and you should be ok. It is NOT and never claimed to be a bank!!!

  • Ebay + Paypal (Score:4, Interesting)

    by handsomepete ( 561396 ) on Monday September 09, 2002 @08:11PM (#4224492) Journal
    The unfortunate thing is that Ebay and Paypal were (and still are, I s'pose) linked so closely. I just sold about 30 items on Ebay and almost all of the inquiry e-mails I received contained the line "Do you accept PayPal? That's the only way I can bid." I ended up caving and getting an account just to up the chance that I would get a decent price on everything. Lo and behold, half of the auction winners ended up paying that way. So far, I've had no problems but plan on closing it immediately after I've finished collecting and shipping.

    Now, correct me if I'm wrong, but I was under the impression that Ebay acquired Paypal. Do they have any known plans to let it die slowly and shove their credit card program to the forefront? Have similar problems emerged from the Ebay cc service?
  • Does slashdot still use paypal as the only billing option for subscriptions?
  • As the defacto online payment system in North America, it needs rules, and fast. The current system allows for people to make minor, unintentional typos, and be charged $25US for the mistake. We are not talking math errors, I mean getting a bank routing number wrong. The transaction will fail, and the good forgiving folks at PayPal ding you $25US each time you hit the transfer button.
    The documentation on their website interface is lame. There is not one place I could find that explicitly says that the dollar figure you enter will be in USD, even if you are logged in as an international memeber. They also conceal the fact that you will likely never see your $5 sign up bonus, until you complete an un-insurable, $250US, single transaction. How is that for a requirement that isn't even in fine print, it is on another page that the fine print links to?!
    eBay [forums.ebay.ca] chat boards often have discussions about PayPal problems, including one fellow today that was told in an email from PayPal support, that he would have to register 2 credit cards with him, because they lost the registration for his original card! If anything goes wrong with your PayPal account, basically you are screwed, and have no way to get your money other than suing a mega-business.
    Good Luck,
    Unhappy PayPal user

  • Law jumping (Score:2, Redundant)

    by papasui ( 567265 )
    Paypal does need some sort of governing body to prevent it from just taking peoples money. Regardless of whether there a bank they are a company dealing with consumers money and need federal regulation as the money comes across state lines.

  • WHY do people still join class-action suits? (Score:5, Insightful)

    by pla ( 258480 ) on Monday September 09, 2002 @08:18PM (#4224527) Journal
    So far, in my life, I have joined three class action suits, all basically after-the-fact since I had no intention of suing on my own behalf and the letter said basically "join or give up your share".

    In one, I don't actually know why someone filed suit, only that I got a free movie rental. In another, I got a whopping $4.00 (four *dollars*, not hundred) in exchange for well over a hundred dollars in abusively-applied late charges from my CC company (who I have only "fairly" paid late twice in over 10 years). In the other, I got less than the cost of the stamp to mail the response (don't even remember what company I got *that* cash-cow from).

    After the CC deal, I resolved never to join another class-action suit.

    The actual people who got screwed... get screwed again, by the lawyers, who make hundreds of millions. And, these settlements don't even "punish" the companies involved as a result, since it "costs" them less to pay off the occasional suit than by changing their offensive business practices.

    I'll join another class-action proceeding when it involves the executives of the offending company going to prison. Other than that, I see no point in lining yet another up-and-coming lawyer's pockets with *my* suffering.

    • Re:WHY do people still join class-action suits? (Score:4, Interesting)

      by cpeterso ( 19082 ) on Monday September 09, 2002 @08:49PM (#4224666) Homepage
      Firms accused of chicanery could get IRS tax break: Companies that cooked books may be able write off fines [msnbc.com]

      plus, companies that must pay fines may be able to deduct those fines from their taxes as "ordinary and necessary" expenses. For example, in the early 1990s, Alaska lawmakers were incensed to learn that Exxon Corp. would be able to deduct almost all of its $1 billion settlement with the state and federal governments over the Exxon Valdez oil spill. A study by the state legislature calculated that tax deductions and the settlement's multiyear payment structure lowered Exxon's actual out-of-pocket cost to $463 million.

      Congress has denied tax deductions for only a narrow range of payments -- including fines and similar penalties paid to governments, some antitrust damages, bribes, kickbacks and treble damages in antitrust cases. On the other hand, almost all payments in private lawsuits are deductible, including punitive damages.

    • It's a tiny point, and I'm sure nobody cares, but:

      No class-action lawsuit will ever result in somebody going to prison, as they are civil suits. Only criminal cases can result in incarceration.

      Oddly enough, IANAL.
      • ...ungtil the law changes. Two things are necessary to fix corporate America:

        1. Corporate death penalty. Hey, shareholders! Your stock certificates are now toilet paper, because you gave your money to criminals! This will encourage stockholder responsibility; no longer will they be able to focus on the bottom line to the exclusion of all else, unless they LIKE seeing their assets on an auction block.

        2. Jail time for executives in civil cases. Demanding that I give you my wallet is a crime, but cheating someone out of $100,000,000 is business as usual? I don't think so. Just because the loss of cash results from a contractual disagreement doesn't mean that FRAUD is not occurring.
    • And, these settlements don't even "punish" the companies involved as a result, since it "costs" them less to pay off the occasional suit than by changing their offensive business practices.

      Unless they're a borderline-profitable dot-com which might be sunk by a big lawsuit. Like PayPal, perhaps?

    • Re:WHY do people still join class-action suits? (Score:5, Insightful)

      by mosch ( 204 ) on Monday September 09, 2002 @09:42PM (#4224890) Homepage
      class action lawsuits generally don't help you individually (unless you're one of the lawyers, or the damage was quite incredible), but they do help society as a whole, because it makes it hard for companies to knowingly fuck people lightly.

      Let's say a company does something that screws you out of $20. Are you going to do anything? No, it doesn't make sense. Now let's say a lawyer finds a million people who got screwed, now the company is facing a real lawsuit, and has incentive not to pull those kind of shenanigans again, even though you might only get $5 back after all is said and done.

      I'm all for class action lawsuits against paypal. A company who locked down a tad over $100 of my money, and won't even allow me to refund it to the sender. They're an illegal bank, and I'm happy to see that a money-hungry lawyer is busy fucking them hard, even if I never see a dime because of it.

      btw, if you're looking for a paypal alternative that's run by a real bank, is FDIC insured, and doesn't charge you to send or receive money, check out c2it by citibank [c2it.com].

      • And don't forget it's the attorneys who really benefit. It doesn't matter what the company offers the plaintiffs as long as the attorneys get away with a few million in their pockets. Notice that you, the one who is supposedly being compensated, did not approve the final agreement. Guess who did?

  • Paypal A money market mutual fund (Score:3, Informative)

    by spiphy ( 83524 ) on Monday September 09, 2002 @08:26PM (#4224563)
    Paypal is not a bank. It is a money market mutaul fund. It is not FDIC insured just like a lot of MMFs. I have never had a problem with paypal and have been considering using it a a higher interest savings account. Paypal averages almost 2% compared to most savings accounts .75%.
    • Paypal is not a bank....have been considering using it a a higher interest savings account.

      If you're just looking for higher interest rates, I'd recommend you use netbank.com -- they are FDIC insured and have amazing interest rates for regular checking and savings:

      Checking 1.51% APY
      Money Market Account 2.67% APY

      (not a netbank employee, just a very satisfied customer!)
    • It is not FDIC insured just like a lot of MMFs.

      So that's what it is...an MMF. Next thing you know, we'll be seeing spams like:

      Order reports 1-5 from slots 1-5 in the list shown below, and pay via email.

      Remove the email address in the #1 slot.
      Move the email address in the #2 slot to the #1 slot.
      Move the email address in the #3 slot to the #2 slot.
      Move the email address in the #4 slot to the #3 slot.
      Move the email address in the #5 slot to the #4 slot.
      Place YOUR email address in the #5 slot.

      Mail a copy of this message to as many people as you possibly can...
    • PayPal is not a money market mutual fund. That is just one of the options for storing your cash. Why do you keep modding that post up when it is so misleading?

  • Wha...? (Score:5, Funny)

    by xenoweeno ( 246136 ) on Monday September 09, 2002 @08:48PM (#4224659)
    There [moojohn.com] can't [216.239.53.100] be [vanrein.org] that [sumcomputers.com] many [paypalwarning.com] people [paypalsucks.com] who [boycott-paypal.com] think [hotspotshawaii.com] that [trashcity.org] PayPal [blogspot.com] sucks! [nopaypal.com]
    • I've said it once and I'll say it again: Any huge company on the web is bound to have a lot of people hate them even if they do almost everything right. You listed 9 sites that hate paypal, and I have to admit, it makes a convincing first look, but where are the 1 million sites by people who love paypal? Oh right, people who love things don't make websites about them, people who hate them do. 9 people in this case. And yes I know there are more, but come on, before you get impressed by those links, remember, those are 9 people who made websites. Want to count the number of sites that say Microsoft sucks and compare? How about linux?

  • Financial regulation is needed everywhere (Score:3, Insightful)

    by Animats ( 122034 ) on Monday September 09, 2002 @09:07PM (#4224745) Homepage
    Banks are regulated. Money market funds are regulated. Credit card companies are regulated. Money transfer firms are regulated. Sooner or later, a judge is going to rule that PayPal is subject to regulation as one of those classes of businesses.

    They're all regulated for a good reason. They hold other people's money. There's a strong temptation to abuse such a position. Historically that's been a major problem, and thus there is regulation. PayPal is no different.

  • Interest on the slush fund? (Score:3, Interesting)

    by Anonymous Coward on Monday September 09, 2002 @09:25PM (#4224809)
    The one single point that jumped out of this article for me, was the allegation that Paypal would be collecting interest on the frozen accounts. That is a big no-no, and should move
    this discussion away from the civil/class action
    stuff, and straight into federal-pound-me-in-the-ass charges for the people at the highest levels of the company.

    They are simply not allowed to do this, and one of the most important things that enables them to claim that they are "not a bank", which they point out repeatedly in their agreements, is that
    they fully insulate the deposit money from their corporate assets. Collecting interest on the deposit money is exactly the opposite of this.
    Did you think they put that detail in the licence agreement because it sounds good? No! They put it there because it is the very thing that allows them to operate outside of banking laws.

    If they don't do this, then there might be some serious consequences -- instead of having a judge merely suggest that their arbitration policies might be unfair (which was simply a wave of the gavel intended to remove a barrier for the procedure of a specific lawsuit), they could find themselves on the wrong end of a judicial ruling to the effect of, despite their claim to the contrary, PayPal is a bank, has function as a bank, and has violated federal, state, and local banking laws. Tack on a few mail fraud violations, and you might get to see pictures of another suit in handcuffs.

    Looking forward to it.

  • I replaced my CC after somebody (not through paypal) was abusing it and because I forgot to change the numbers on Paypal they locked my account and wouldn't reactivate it with the new numbers and only with my checking account.

    Needless to say, they have not seen a dollar since from me.

    If you sell something online please offer more payment options then paypal!

  • I have used PayPal for over two years now, I have the debit card and use it often. I earn around 2% on my balance and can move money to and from my actual bank accounts. I have never had ANY problems with it. I've used it mainly for eBay transactions, but I still keep a $300-500 balance and have never had any issues.

  • It's all a gamble (Score:2, Insightful)

    by lpret ( 570480 )
    Ebay is as much of a gamble as PayPal. If you're already *hoping* that the item you ordered on Ebay is truly what it is, one more gamble that you'll actually get your money sent is only reasonable.

  • This wouldn't be an issue if the banks were better (Score:5, Interesting)

    by targo ( 409974 ) <targo_t&hotmail,com> on Monday September 09, 2002 @11:06PM (#4225209) Homepage
    I come from a small country in Eastern Europe (Estonia) but I have lived in the US for the last three years. One thing that surprised me most when I moved here was the backwardness of the US banking system (this is not meant as a flamebait, just the sad truth). In my home country there's a very advanced electronic banking system. Some examples:
    1) Whenever you open an account in any bank, you always get free Internet access to it and full control over your account (since 1997).
    2) You can transfer money from any account of any bank to any other account of any other bank, the account number system, routing and other issues are standardized by the central bank (since 1995).
    3) In most banks, all Internet-based transactions are free (since 1994).
    4) Proper security. None of this 4-6 digit PIN nonsense, you get either at least two passwords (one made up by you, the other comes on a password sheet that contains tens of different passwords and changes from session to session), or a smart card (since 1996).
    I guess there are lots of other features by now but these are the ones that were implemented 5+ years ago and still aren't implemented in the US.
    I find it truly weird that I have complete control over an account and I can handle all sorts of transactions in my home country that is thousands of miles away but I still have to walk over to my local bank that is just 3 miles away every now and then.
    Just one example of how useful the system was: When we went out to lunch with friends, we never had to go through this bill-counting ritual (got change for 20?) when paying for it, one guy paid for lunch, and the others just transferred money immediately and directly to his bank account.
    If only the US banks got their act together and implemented a normal bank-to-bank transaction system, we wouldn't have this discussion here.
    • I guess there are lots of other features by now but these are the ones that were implemented 5+ years ago and still aren't implemented in the US.
      I find it truly weird that I have complete control over an account and I can handle all sorts of transactions in my home country that is thousands of miles away but I still have to walk over to my local bank that is just 3 miles away every now and then.
      Essentially all of those services are available from US banks and the larger merchants. You can live your financial life on-line if you choose to do so, and the banks are pushing their customers in that direction.

      Why are USians resisting that push? Simple: they aren't stupid. In the US there is common law, written law, and precedents stretching back to colonial times that grant reasonable levels of protection to consumers when they engage in paper based transactions. If I give you a paper check, you and I both have certain rights and duties, and we know where we stand if something goes wrong.

      There are no such protections for electronic transactions. None. Nada. Zero. And the big boys want the little suckers, I mean people, to go all electronic. Care to guess why?

      sPh

      • If I give you a paper check, you and I both have certain rights and duties, and we know where we stand if something goes wrong.
        There are no such protections for electronic transactions. None. Nada. Zero. And the big boys want the little suckers, I mean people, to go all electronic. Care to guess why?

        Estonia has had an electronic signing law for a while, electronic documents are just as binding as papers.
        Also, we are discussing big guys screwing little guys in the US, not in Estonia, so it kinda disproves your point, doesn't it?

        I guess that when there was a shift from gold coins to paper money then there were also many guys like you raising panic. But history has proven that the new system's efficiency far outweighed any other concerns.

  • Unhappy with Paypal? Call Craig at (402) 935-2258 (Score:4, Informative)

    by goingware ( 85213 ) on Tuesday September 10, 2002 @07:43AM (#4226755) Homepage
    PayPal's executives have stated publicly that they try to avoid phone calls to keep their costs down.

    If you're unhappy with PayPal, PayPalWarning.com [paypalwarning.com] lists a bunch of phone numbers. Call (877) 672-9725 if you want to reach them toll free.

    Here's a bunch of known paypal numbers:

    (402) 935-2000 / (402) 935-2001 / (402) 935-2062 / (402) 935-2258 [this is Craig, complaints resolution manager] / (402) 935-7733 / (402) 537-5740 (fax) / (650) 251-1100 / (888) 221-1161 / (800) 836-1859 / (877) 672-9725 / (866) 272-9725

    And addresses, in case you need to send a process server or wish to register a complaint in person:

    PayPal, Inc.
    1840 Embarcadero Rd.
    Palo Alto, CA 943030

    PayPal, Inc.
    11128 John Galt Blvd.
    Omaha, NE 68137

    I signed up for paypal because it was the only way someone who had something I wanted to buy would accept payment. But I wouldn't allow them access to my checking account. They won't let you spend more than $250 through their service unless you allow them direct access to your checking account.

    After reading PayPalWarning.com, I decided that I never would use them again.

    I was unaware until recently that by giving PayPal access to your checking account, you forgo the liability protections that a credit card vendor is required to give you.

    So if you pay a lot of money through paypal for some merchandise you never receive, you basically have no legal recourse - you're screwed. If you had paid with a credit card, you could dispute the charge with your credit card company and they'd have to give you your money back.

    I think I'll call Craig when I get up and ask him to delete my account.

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