Sunday, October 21, 2012

PayPal is Trying to Limit Your Legal Rights

If any of you use PayPal, you probably got an email today with the subject "Notice of Policy Updates."  You may have deleted it without reading it, but it contains an important change in PayPal's policy that may affect and limit your legal rights.  Here is the email I got:
"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 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."
This is pretty significant, not only because it prevents you from filing a class action lawsuit, but also because it prevents you from being a member of a class in a class action. Chances are, if you have any sort of claim against PayPal in the future, it will not be large enough for it to make monetary sense for you to file a lawsuit (or for an attorney to represent you), which is exactly why PayPal is making this change.  However, a class action allows you to aggregate your small claims with the claims of other similarly situation customers.

So, if you want to opt out of this new change (which also requires you to arbitrate any claims), here is the procedure from the PayPal website:
"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."

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