The Moment You've Waited For: Zepeda v. Paypal - Class Action Lawsuit

[Ryuzaki]

Submit a Claim: https://www.accountholdsettlement.com

If you had an active PayPal account between April 19, 2006 and November 5, 2015 and had a hold or reserve placed on your account, and/or the account was closed or suspended by PayPal, you are a Claims Class Member. In order to receive a Settlement payment, you must timely submit a Claim.
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And here's a Reddit discussion going on about it.

I'm going to read about it before I start blabbering. I've never had a hold on my account (had it since 2006), but I know millions of people have. I went out of my way to protect Paypal and they always did the same for me. I never withdrew money immediately, letting it sit for months to make sure there was always a float in case there were disputes (never had any), and I'd always keep a four figure float so they wouldn't be nervous.

If you never got a hold placed, did you do anything purposefully like I did to keep it that way? If you did get a hold, do you know why?

I'm not entirely convinced this is as legit as people say, in the same fashion of people crying about Adsense and Amazon and them not paying out on certain things once the tomfoolery is discovered.

 

[Steve Brownlie]

I must say I've had a similar experience to @Ryuzaki and have only good things to say about PayPal and generally recommend them. To give context though I'm a full on business customer with a virtual terminal so I have an account manager to ring with a direct line and so on if anything does happen. To be fair though I've never needed it as issues have never seemed to need more than for me to pop a quick document in and it was taken care of.

 

[backwoods]

$3.2M settlement? Wow, they gottem' good! lulz

Lawyers take = $1M

"The Court did not decide in favor of Plaintiffs or Defendants. Instead, both sides agreed to a settlement."

 

[RomesFall]

I had a client for a little over 6 months back in 2013-2014. Our initial discussion was that he'd want me on full-time and so I squared things up with getting other projects finished for my other clients who were more short term.

I signed on with him, did the work, hit all the targets we set out and exceeded them. We had a contract but nonetheless I tracked all of it, kept conversation logs, e-mails, hours worked and all the stuff you should do.

6.5 months in I wake up and see an e-mail from PayPal and my account is minus $XX,XXX dollars. I go login to PayPal and see he's issued disputes/chargebacks to which PayPal awarded straight away. At least that's what I thought at the time.

So I dig into it more, get in touch with PayPal (the guy is nowhere to be found) and they say there's nothing they can do because he funded his account with his credit card and had gone through them to get his money back.

I find out that this means I have to pay the money to PayPal?

..........

At this point I'm fuming, telling some idiotic person on PP's customer services team that I've got proof that I did the work, proof that it was for monthly services etc. All to no avail... They didn't seem to understand what I was saying, I tried again with e-mails, multiple different agents I talked to on the phone. Nothing.

This was all pretty early on in my 'career' as a freelancer back then, and literally that money had been spent on food/bills and that's it. That trickled through to my bank, but luckily the bank reversed the charge. Although a month later they cancelled my account.

What I learned from that experience is that not only is PP's system flawed, but they literally don't value their account holders at all.

They did nothing to help, didn't even offer any legal advice. To this day that account is still minus $XX,XXX in 'arrears' because I refuse to pay it, because why the hell should I?

They could write off that money as easy as pie or go after the credit card company because something illegal went on there... But they didn't. Whereas for me at the time that could have pretty much ruined my entire life. Plus they will probably still come after me at some point for it.

I have a new account, which I needed to get, but they don't know it's me lol - I wish I didn't need it though because they're shocking.

They might work perfectly fine for some people, but the other extreme of the experience can mean them ruining peoples lives and that's not on.

 

[CCarter]

Paypal's brand is a breeding ground for terrorists. They seem to go out of their way to create terrorist from what would be normal loyalist customers. A customer terrorist is a random individual that uses your product or service but feels like they didn't get all they could out of it. When they try to contact you regarding their problem they are treated like shit, not even a human being, just a number. What you have done is create a fuming individual. They will go out of their way to write their bad experience about your product, service, and company whenever possible. Example is in threads like this, you'll have some people that used Paypal for a while and had no problems, they aren't really Apostles or Loyalist, they are mostly mercenary level customers. You get the job done so they stick with you, but when these individuals see someone fuming coming along they won't really "jump" to help the brand as a brand Apostle or Loyalist would. When a terrorist or defector sees an opportunity to get payback, expect payback.

The interesting part is it's hard to measure the effect on a small brand when they have these terrorists running around talking about bad experience unless you are a huge organization that can start seeing declines in revenue and potential sign ups. When you start seeing a decline in potential signups without any reason on your behalf, that means there is someone or a group of people out there that's poisoning your potential customers - that's a problem that needs addressing.

But Paypal, blinded by their own success in the past has not taken steps to improve the customer's experience. I had a problem where one of my accounts that was from like 2001 was put a $X,XXX hold on FOREVER until the account closes on top of that a 20% rolling monthly reserve. So immediately that $X,XXX was being held by them forever, plus 20% of all charges would be held for a 3 month period. That was just "placed" on there.

None of that made sense so I called them up. First time I called I was redirected to some 3rd world country's support. Obviously they couldn't help me nor had the power to help me at any level so they redirected me to some department that handles holds or whatever. I was on hold for over 1.5 hours until they were closed for the day. WTF.

I then had to call them up again and was placed on hold for 45 mins until I got proper customer support. You can't email then the problem at this level cause support tells you to call in for these problems. WTF. So the only way to resolve this problem is to ALWAYS put your customers on hold for over 45 mins to get things resolved? All the customer is going to be doing is fuming during that 45 mins of wasting their time. Eventually someone picked up and removed the $X,XXX hold immediately, but they kept the 20% rolling reserve. Problem with that is if I had profit margins under 20% I would be completely fucked no? I would have overhead of lets say 90% and a 10% profit margin, so I would be screwed 10% for every order. That's crazy compounding problems if you don't have other sources of revenue or payments.

Now I could have kept $X,XXX amount of money in there as a float at all times, but no one ever told me anything or recommended that from their side. Only time all this was recommended was after the situation happened. So at that point I'm thinking, well fuck Paypal. So now when setting up businesses I never use it, and I'd be considered a terrorist to their brand. When you automatically side with customers versus doing a fair 50/50 for disputes you are creating a long-term problem where vendors will become defectors if they have other options. If they currently don't have other options they'll definitely become "customer hostages". They'll leave the second an new option is available.

The only hold for 1.5 hours plus the on hold for 45 mins on top of that you are seen to side with customers 9 out of 10 times to ensure people still use your service, why would I not say "fuck Paypal" and never allow any business I run to accept Paypal? I was hit with a $X,XXX hold out of nowhere because of some arbitrary rule I never knew about, I couldn't read about, and I wasn't warned about. So what mystery problem am I going to come across when I start doing XXX,XXX a month in recurring billing suddenly some time down the road? Will I even be able to get a hold of them in that future problem? That unknown is unacceptable.

I do know this certain countries they have limited options and no credit cards or debit cards with the Visa or Mastercard logo, so they are limited on what they can do and Paypal is their only option in that country. So essentially I would be blocking off potential revenue for a good section of certain countries, but there are VCC (virtual credit card) options I can redirect users to that do accept paypal. Whenever I have problems like this I tell users about these VCCs, but that's like maybe once every 3 months a potential customer asks about Paypal. If a user really wants one of my service they'll find a way to get it otherwise they weren't really excite in the first place and would cancel in 3-4 months. Basically I didn't convince them we were the superior solution and that's where my marketing would have to get better.

With Stripe, just like a regular merchant account, I'm in full control. I can refund a customer if I want to, I can also deny a customer a refund if I want to - but again doing stuff to creating mini-terrorist wouldn't necessarily be in my businesses' interest. With stripe if there is a chargeback I have 90 days to gather all the proof and dispute the chargeback. If a customer tries to chargeback stating they never used the service I can turn around and state "here is a log of you logging in every other day for the last 120 days, spending 20-30 mins each session within the interface." The decision will go in my favor and that's that. But the whole point is to NEVER get to the point where you need to refund a person or fight a chargeback. That can only be done with customer service, follow up questions to customers asking what they think and of any ideas for improvements, etc. You have to want to interact with your customers since they keep the lights on, but some of these company's own customer support - it's no wonder they get chargebacks and refunds left and right.

Some operations I've setup I can count all the chargebacks and refund attempts on a single hand - but that's because it was setup right from the beginning. I know one small company that decided to do a 90% or 95% discount for 6 or 8 months (even that was WTF - you are devaluing your brand immediately with that move), then when someone wanted to cancel and refund like on day 32 of the refund period, they haggled the guy for the refund, then they only gave a partial refund, then they took 3 weeks to haggle for the extra $5, yes 5 fucking dollars, they didn't want to refund this person. For 3 weeks they went back and forth in emails writing long long emails that took hours out of their day - for $5. And they never refunded that $5 the customer just gave up and became a terrorist (cause him telling me about it was the only way I could know about it - if he's talking to me about it, he's definitely talking to others). My time is worth more than $5, so it's simply better to refund and not poison the water, versus doing a ton of back and forth to rip someone off for $5, and then turn them into a terrorist where whenever they hear about the brand they'll tell the story of how that company ripped them off for $5.

At first I didn't believe it until I saw the emails and I just shook my head, cause I never thought a company would waste that much resources for a moral victory over one random customer. Then you have to ask yourself how many other terrorist is this company creating day after day. At some point the only way for that company to survive is to do de-valuing promotions like $9 for 6 months and other cashflow reducing gimmicks cause they've tainted their brand in the potential customers minds via those defector and terrorist they created. (Exactly what Paypal has done for years resulting in discussions like this all over the internet).

Refunds are another thing, you can avoid those by simply avoiding customers who are likely not to want your product in the first place. If your product costs $20 and they aren't willing to pay that - it means your product does not excite them enough or does not convey value. If you have to offer them a discount or coupon just to get them onboard - are those the customers you really want onboard? Most likely they never wanted your product in the first place, and that discount, coupon, and de-valuing promotion is breeding ground for refunds, chargebacks, and customers who don't like your product but are addicted to "discounts" and "coupons". You can make more money if you use added value promotions instead of "de-valuing" promotions. But that's another topic for another day...

Lesson, don't accept Paypal, don't create terrorists, and do everything in your power to ensure your customers love you, your product/service, and you continue to improve your company at every level so you can stay in business longer.

On top of all that, don't forget Paypal increased their dispute period from 45 days to 180 days.

 

[stackcash]

I've had $1000-$3000 held here and there for a few days, but always got it back. Is that what they're talking about in this? I'd love me some money.

 

[juliantrueflynn]

I think it was Internetbs.net that got over 1 million frozen in their PayPal account years back. The general reaction was 'who keeps that much money in something that is not even considered a bank?' Not like it's FDIC insured so if it gets stolen or anything they don't owe you jack.

 

[turbin3]

Paypal certainly isn't your friend if you happen to be in the firearms industry. Based on inconvenient meta data in transactions, even if everything was in accordance with their TOS, a LOT of small business owners in that industry have had accounts locked at random, and tens of thousands of dollars frozen.

I, myself, have never had a problem with them, because I never include ANY information in transactions unless absolutely necessary, and even then, I try to include it in such a cryptic manner so as to only be understood by the person I'm completing a transaction with.

 

[Ryuzaki]

$3.2M settlement? Wow, they gottem' good! lulz

Lawyers take = $1M

"The Court did not decide in favor of Plaintiffs or Defendants. Instead, both sides agreed to a settlement."

Well that's disappointing. As I said, I hadn't a chance to read about it yet. I was hoping they were getting taken to the cleaners. This is more like a pacification attempt.