PayPal Settles Class Action

by Glen Shapiro, LawAndTax-News.com, New York

17 June 2004

PayPal announced on Monday that it has reached a settlement with disgruntled customers who bought a class action suit against it.

The eBay-owned online payment firm found itself in 2002 facing claims that several users of the service had had their accounts frozen or drained without explanation.

Although the case, and a similar one pending in California State Court have now been settled under undisclosed terms, PayPal has not admitted any wrongdoing.

"We're very happy to put this case behind us, which is why we settled," PayPal spokesperson Amanda Pires explained to Internetnews.com this week, adding that:

"We do not acknowledge the truth of the allegations, but we decided to settle so we could focus on more productive areas of our business."

The amount set aside by the firm for the settlement is reported to be in the region of $9.25 million, less $3.3 million in attorneys' fees and $135,000 in administrative costs.

Any PayPal customers not residing in EU countries who opened an account between October 1, 1999 and January 31, 2004 are eligible for a share of the settlement, which awaits approval by the Federal District Court in San Jose, California.

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