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Paypal Slips 'No Class Action' Clause Into Policy Update 294

Posted by timothy
from the real-class-actiony-paypal-real-class-actiony dept.
First time accepted submitter Guru80 writes "PayPal recently posted a new Policy Update which includes changes to the PayPal User Agreement. The update to the User Agreement is effective November 1, 2012 and contains several changes, including changes that affect how claims you and PayPal have against each other are resolved. You will, with limited exception, be required to submit claims you have against PayPal to binding and final arbitration, unless you opt out of the Agreement to Arbitrate (Section 14.3) by December 1, 2012. Unless you opt out: (1) you will only be permitted to pursue claims against PayPal on an individual basis, not as a plaintiff or class member in any class or representative action or proceeding and (2) you will only be permitted to seek relief (including monetary, injunctive, and declaratory relief) on an individual basis. With so many privacy policies changing to include such wording, does it really hold any weight if some obscure and buried opt-out option isn't checked?"
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Paypal Slips 'No Class Action' Clause Into Policy Update

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  • by GoodNewsJimDotCom (2244874) on Thursday October 18, 2012 @01:00PM (#41694607)
    EULA: You cannot sue us for any reason.

    Agree to use our product.
    • by GoodNewsJimDotCom (2244874) on Thursday October 18, 2012 @01:03PM (#41694649)
      All kidding aside, anyone notice how snarky it was for ebay to not call itself an online auction? If ebay was an auction site, it would have had to do so much localization because it'd be sued in every state and county with different rules for auctions. Also Paypal isn't a bank, so it doesn't have to deal with banking regulations.
    • by Chemisor (97276)

      In the US, being sued is effectively a financial death sentence. If you go to court, you come out bankrupt, whether you win or lose, unless you are a multimillionaire or a big company. When you consider this, EULAs become not only very understandable, but quite fair and proper. IMO, you should not be able to claim anything above refunding the purchase price unless you and the seller explicitly agreed otherwise.

      • "When you consider this, EULAs become not only very understandable, but quite fair and proper."

        Nonsense. People can be, and sometimes are, damaged far beyond just the face value of the transaction. There is nothing "fair" about removing your option to sue should you want to. You have a right to sue for damages, under normal circumstances (i.e., no agreement otherwise), and that right should not be taken away by default.

      • by dkleinsc (563838)

        In the US, being sued is effectively a financial death sentence.

        Unless, as is frequently the case, the loser is required to pay attorney's fees. Also common is for individual (as opposed to corporate) plaintiff's attorneys to be paid solely on a contingency basis, which is to say that they get a portion of whatever the winnings are.

        If you go to court, you come out bankrupt, whether you win or lose, unless you are a multimillionaire or a big company.

        ... like eBay / PayPal.

        IMO, you should not be able to claim anything above refunding the purchase price unless you and the seller explicitly agreed otherwise.

        You sell me a pill that you represent as providing complete treatment for a particular disease for $5000. Because your pill is in fact a placebo laced with cyanide, I instead of getting better end up in the hospital for

  • Article/poster should discuss how to opt out and what if any, the consequences are.
  • *IANAL* of course.

    Not everything written in an agreement will hold up in court, if/when tested. For example, you can't write an agreement that expressly violates laws. In particular, the purpose of class action suits is exactly to allow group action where individual "wrongs" are not large enough to prosecute, but combined are sufficiently big. Trying to circumvent the law the way PayPal is doing is by itself probably a good ground for a class action suit (but got to wait until some actual harm is done, afai

    • *not a lawyer either* either From what I've heard, they're putting these clauses in because of a recent occurrence in law that allows them. I'm not sure if it is a new law, or a new interpretation of the law by Federal courts.
      • It's an out of control supreme court handing new powers to corporations while taking the rights of individuals away.

        I am not a lawyer either, but it sure seems like a due process violation to me.

        Cue the people that say "due process" only applies to criminal trials.. I know.

      • by X0563511 (793323)

        Here's your answer. [wikipedia.org]

  • by Black Parrot (19622) on Thursday October 18, 2012 @01:09PM (#41694777)

    We need to start pressuring Congress to create a law stating that access to the courts is a fundamental right that cannot be denied as the terms of a contract.

    • by timeOday (582209) on Thursday October 18, 2012 @01:21PM (#41695003)
      It is absurdly out of hand. I noticed the other day when my 14-year-old fired up the XBox it hit him with another "Notice of Change to EULA" (which he of course ignored).

      The whole libertarian notion of mutual consent has become a complete farce. How could we have known 6 years ago when we bought this thing how much to pay for it, based on changes they would make far in the future, churned out by a team of lawyers so productive we'd never even have time to read it, even if we had the legal background to do so? Again, this is a legal sham.

    • by Hatta (162192)

      You realize that Congress is wholly owned by the corporations that benefit from these arbitration clauses, right? Congress will be no help.

      No, what we really need is people to extract vigilante justice from the executives of the corporations that have wronged them. A few dead CEOs and they'll be begging to allow us access to the courts.

  • Unless you opt out...

    Best option IMHO is to opt out - as in, completely. As in, don't use Paypal, ever, for anything. There are alternatives.

    • There is no alternative if you want access to ebay. Nothing.

      For many small sellers ebay is the only choice. The other auction sites are often too small to be significant.

      I guess you could argue Amazon is in the hunt... but they're still small compared to ebay.

      • The other auction sites are often too small to be significant.

        Well, not that I'm a huge online auction seller (just the odd unused widget cluttering up a closet now and then), but I've actually had a lot better luck with Craigslist and Amazon than I ever had with eBay, at least in the past 5 years or so. I sold my first item on eBay (I think) in 2001, and back then it was great. Now, dealing with the draconian fraud checks, no-pay bidders, offshore bidders, fraudulent complaints, 3-week wait for your money on Paypal (if you're lucky), cancelled bids at the last seco

  • by timeOday (582209) on Thursday October 18, 2012 @01:14PM (#41694847)
    No, seriously. Here is the email I received from PayPal on 10/10/2012 at 1am:

    Notice of Policy Updates Dear xxx xxxx, PayPal recently posted a new Policy Update which includes changes to the PayPal User Agreement. The update to the User Agreement is effective November 1, 2012 and contains several changes, including changes that affect how claims you and PayPal have against each other are resolved. You will, with limited exception, be required to submit claims you have against PayPal to binding and final arbitration, unless you opt out of the Agreement to Arbitrate (Section 14.3) by December 1, 2012. Unless you opt out: (1) you will only be permitted to pursue claims against PayPal on an individual basis, not as a plaintiff or class member in any class or representative action or proceeding and (2) you will only be permitted to seek relief (including monetary, injunctive, and declaratory relief) on an individual basis. You can view this Policy Update by logging in to your PayPal account. To log in to your account, go to https://www.paypal.com/ [paypal.com] and enter your member log in information. Once you are logged in, look at the Notifications section on the top right side of the page for the latest Policy Updates. We encourage you to review the Policy Update to familiarize yourself with all of the changes that have been made.

    Not that I am defending it.

    • by game kid (805301)

      Yeah. My copy of the notice arrived a day earlier, even. As with Valve's change [slashdot.org] and eBay's [slashdot.org], I thought they already had a no-CA clause anyway. All the Cool Kids, EULAs=sign away your first born and their virginity, class actions=free coupons for their service, et cetera.

      So meh.

  • Binding Arbitration is contract legalese for "meet our FOAF, the arbitrator...".

    Think about it. Who is the arbitrator and who does he / she want to please / not piss off? Whose circle does he / she run in? Who is in a position to provide work / favors / introductions / etc. for him or her? Who does he or she identify with? The whole science of jury selection that lawyers apply them to so assiduously is based on the answer to those types of questions. And yet in "binding arbitration" you're being "paranoi

  • by nimbius (983462) on Thursday October 18, 2012 @01:17PM (#41694915) Homepage
    most major multinational corporations preserve the tradition of arbitration as your only means of recourse as theyve found the courts rule far too often in the favour of the users. Court time is reserved strictly for corporations to battle other corporations for control of consumers but once that control is entrenched? your arbitrator should you elect to meet with one will likely be from a limited pool of closely guarded individuals with close ties to the corporations for whom they arbitrate. Your ruling, statements, and even the case itself will remain entirely confidential with rarely any record of it transpiring. Most importantly, Arbitration allows a corporation to remain blameless. Never having admitted fault, they secure their public image and in turn their investors confidence as arbitration amounts to nothing more than a kangaroo court.
  • How to opt out (Score:5, Informative)

    by bwcook0 (995211) on Thursday October 18, 2012 @01:18PM (#41694935)
    Opt-Out Procedure. You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131. The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate. If you opt out of the Agreement to Arbitrate, all other parts of the User Agreement, including all other provisions of Section 14 (Disputes with PayPal), will continue to apply. Opting out of this Agreement to Arbitrate has no effect on any previous, other, or future arbitration agreements that you may have with us.
  • Here is where collective power would be of use. On the market side, we can exert pressure on paypal by making efforts to drive their customers to the competition (and reaching out to the competition to help them highlight their lack of this phrase). This approach does require there is actual viable competition, and that they don't pull the same crap (so in many markets it wouldn't be effective).

    The second side is government. This is where regulation shines! Let's lobby Congress (and hell, local government)
  • by macraig (621737) <mark...a...craig@@@gmail...com> on Thursday October 18, 2012 @01:18PM (#41694949)

    This is OLD news: the announcement from PayPal went out over a month ago, and I mailed a signed opt-out declaration back to Paypal myself more than four weeks ago.

    More important is that fact that Paypal actually had the decency - ??? - to include the opt-out exception in the first place. Do you have any idea how pervasive these clauses are now? ALL the corporate kids are doing it. If it's a business that provides a service and uses one-to-many type contracts - service agreements, terms of service, etc. - to establish the service, then you can bet such a clause is imminent if not already present. Valve added one months ago, AT&T did the same before PayPal, etc. EVERY service agreement will have one by the end of this year.

    It's all thanks to yet another corporate-friendly ruling last year from the same Supreme Court that gave us the Citizens United ruling and allowed the upcoming election cycle to be fully bought.

  • Gone are the days when companies invested in bettering their products and protecting their customers.

    It's now cheaper to invest in lawyers and better contracts, at which point these companies can continue to provide sub-par products or customer service with no ill consequence.

    PayPal .. I use them everyday with no complaints ... heck I even like the product ... but with this latest update it reads like they are preparing for armageddon ... virtually every change leaves the customer worse off than before ...

    R

    • by shentino (1139071)

      What choice do we have when they all gang up on us?

      Companies love being in bed with each other.

  • How is that even considered evil?

    Hm, let's check how to do this...

    You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

    The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate. If you opt out of the Agreement to Arbitrate, all other parts of the User Agreement, including all other provisions of Section 14 (Disputes with PayPal), will continue to apply. Opting out of this Agreement to Arbitrate has no effect on any previous, other, or future arbitration agreements that you may have with us.

    ... yeah, never mind. I get it.

    At least you don't have to deliver your opt-out notice in person and wrestle a grizzly to get inside their offices.

  • This one is particularly bad because there is no "obscure and buried opt-out option" to check. The process to opt-out requires you to mail a physical signed letter to some office. I'm pretty sure none of these terms are actually legal and enforceable, particularly in California where the courts have already struck down binding arbitration clauses before, but it's a deterrent to actual justice being served. My wish would be that the "Severability" clause was found illegal, so if the corporation decided to
    • by compro01 (777531)

      Nope, it's legal nationwide. The Federal Arbitration Act overrides state laws prohibiting forced arbitration. See the case AT&T Mobility v. Concepcion.

  • As it was pointed out several times when Sony pulled this crap, EULAs < Law.
    The problem is not these EULAs, but the fact that regardless when you go to court, he with the more money wins.
    Guess what? The one with the more money is pretty much always going to be paypal.
  • They are a third party biller and as such, you can't dispute a billing error with your credit card company or bank. You must go to PayPal. That's why I stopped using them. All this other crap is just irrelevant silliness.

    As for eBay, I bid/buy things from sellers that take other forms of payment. However, eBay makes it very hard for vendors to accept other forms of payment.

    Who would of thunk that the selling of cute little Pez dispensers could lead to such evil.
      .

  • by guises (2423402) on Thursday October 18, 2012 @02:25PM (#41696245)
    Not to sound resentful, but I submitted [slashdot.org] this a month ago when it was first published. Actually, I do intend to sound a little resentful... What I submitted was the Ebay policy change, which is apparently being kept separate from the Paypal one. More importantly, you only have until Nov. 9th to opt out of the new Ebay policy.
  • AT&T vs. Concepcion is what allowed companies to get away with this crap. The California Supreme Court rightly ruled that such clauses are "unconsionable" where there is disparate baragaining power between the two parties. Even before reading this case, I had the exact same train of logic. When I am negotiating with a peer, it is fine to agree to such clauses. When I have the upper hand, the court should not recognize such abusive clauses.

    If the Supreme Court (led by Scalia in a 5-4 decision) won't sho

  • if you have problems with paypal, your first mistake was to use paypal. They are not a bank.
  • After suffering with all of Paypals issues and hearing horror stories from other PayPal customers, this was the final straw.

    The best way to make them reform their practices isn't to whine and complain, they figure as long as you put up with it, then no worries. The best way to get them to change their practices is to vote with your feet and let them know why you're leaving.

    I closed my PayPal account last week and if it makes getting stuff on EBay harder, so be it. It's on them if they insist on me using it

  • by steppin_razor_LA (236684) on Thursday October 18, 2012 @07:56PM (#41700289) Homepage Journal

    I noticed the same thing when I got a dashboard update. IMHO, the companies should be able to change their legal policies on the fly -- as long as they are willing to refund you for all of the equipment/software/etc you have purchased if you don't find it acceptable.

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