Three Paypal customers have filed a federal lawsuit against the company for unlawfully freezing their accounts and taking their funds without explanation. The plaintiffs, who hail from California and Chicago in the United States say the firm has violated racketeering laws.
They are now pursuing reimbursement, as well as punitive and exemplary damages, on behalf of all other users who’ve had their accounts frozen in the past.
One of the plaintiffs, Lena Evans, said she had been using Paypal for 22 years before the company froze and later seized $26,984 from her account without explanation. Evans had been using PayPal for her clothes business on eBay, as well as to transfer funds to a poker league she runs and a non-profit that assists women with a variety of needs.
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Shbadan Akylbekov’s account was limited for six months before $172,000 was seized from his account. He says he used an account belonging to his wife’s company to sell Hyaluronic pens, a beauty regimen that uses needle-less pens to inject hyaluronic acid into the skin.
According to Akylbekov, Paypal sent a letter to his wife alleging that she had “violated PayPal’s User Agreement and Acceptable Use Policy (AUP) by accepting payments for the sale of injectable fillers not approved by the FDA.”
Read: PayPal Users Report Account Limitations Ahead of Security Changes
The letter further explained that the money had been taken from the account “for its liquidated damages arising from those AUP violations pursuant to the User Agreement.”
This is not the first instance where Paypal has been accused of freezing and seizing funds from user accounts. Many Kenyans who are regular users of the service have decried similar incidents from the platform.
The users said their funds were being held by the online cash transfer system while some reported that they had lost their accounts entirely. The website is popular with a number of Kenyans, especially freelancers and those working online.
Read: How To Transfer Money Between Your PayPal And M-Pesa Accounts
Most of the affected users are freelance and online workers who buy and sell products online, research, do online writing, virtual assistant jobs, and transcription.
In 2021, Paypal announced plans to bump up its website’s security measures. Every person using Paypal is now expected to add their phone number in order to continue using the service. However, several users have reported online that the website has suddenly limited their accounts and is asking for more information.
The three plaintiffs are now proposing a class-action suit against the company.
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