Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon Feb 1 2016 10:44:12

PayPal Lawsuit Settlement Raises Security Concerns

By: Ina Steiner

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Online sellers who have dealt with holds on their PayPal funds over the years are entitled to part of a $4 million class action lawsuit settlement. But in order to get their piece of the settlement, they have to go to a website not operated by PayPal and enter information that has the potential to put their PayPal accounts at risk.* If they do nothing, they will not receive any funds they may be entitled to.

*if the website is breached.

This morning's Newsflash has the latest details about the settlement, and as we noted, sellers have to enter their name, address, phone number, and the email address associated with their PayPal account on a form on a website set up by a claims administrator appointed by the court. (The website is registered privately - that means you can't use the WhoIs database to verify that the URL was set up by the settlement administrator.) 

Experts warn that people should not hand out such information to anyone since it can put them at risk for an account takeover - many online sellers receive phishing emails looking for that information on a daily basis. The website does not provide information about how the data is stored, who has access to it, and what will happen to the database of user account information after the settlement.

However, it does publish the following Privacy Policy:

The Claims Administrator is committed to maintaining the privacy of your personal information. With respect to the collection, use and disclosure of personal information, the Claims Administrator makes every effort to ensure compliance with applicable law, including, but not limited to, the Data Protection Act, 1998, the U.S. Privacy Act of 1974, the U.S. Paperwork Reduction Act of 1995, the US-EU Safe Harbor Privacy Principles and internal information quality guidelines. In connection with the claims administration process, you may be asked to provide certain information, including, but not limited to, name, postal address, telephone number and transactional account data. The information collected will be used solely for the purposes of the Settlement and the claims administration process, as governed by the Court.

Here's a copy of the email PayPal has been sending out to users this month:

NOTICE OF CLASS-ACTION SETTLEMENT.

THIS NOTICE MAY AFFECT YOUR RIGHTS. PLEASE READ IT CAREFULLY.

A settlement has been reached in a class action in which the plaintiffs allege, among other things, that PayPal improperly handled disputed transactions on PayPal accounts and improperly placed holds and reserves on accounts or closed or suspended accounts. Plaintiffs also allege that PayPal failed to provide annual error-resolution notices and monthly account statements under the Electronic Fund Transfer Act.

You are a member of the Settlement Class if you had an active PayPal account between April 19, 2006 and Nov. 5, 2015. Certain Settlement Class Members who had a hold or reserve placed on their account and/or who had their account closed or suspended by PayPal are eligible to receive a monetary payment upon submission of a valid claim form.

This notice summarizes the proposed settlement. For the precise terms and conditions of the settlement, please see the Settlement Agreement available at http://www.accountholdsettlement.com/ or by visiting the office of the Clerk of the Court for the United States District Court for the Northern District of California, 1301 Clay Street, Oakland, CA 94612, between 9:00 a.m. and 4:00 p.m., Monday through Friday, excluding Court holidays.

PLEASE DO NOT TELEPHONE THE COURT OR THE COURT CLERK'S OFFICE TO INQUIRE ABOUT THIS SETTLEMENT OR THE CLAIM PROCESS.

When you initiate a claim on the website, you'll be asked two questions - and if you answer yes, you'll be asked to answer additional questions:

Question 1: Between April 19, 2006 and November 5, 2015, did you have a hold or reserve placed on your PayPal account?* (Yes /  No)

Question 2: Between April 19, 2006 and November 5, 2015, was your PayPal account closed or suspended?* (Yes /  No)

Question 3: If you answered “Yes” to Question 1, do you wish to submit a Basic Claim, which, if valid, will result in a fixed payment based on the amount and length of the longest hold or reserve placed on your account or to submit an Alternate Claim based on the amount of documented damages, up to $2,000? You may select either a Basic Claim or an Alternate Claim, but not both.*

Question 4: If you selected “Alternate Claim” or answered “Yes” to Question 2 and want to submit an Alternate Claim, please describe in the space provided below the basis for your Claim and please upload any supporting documentation. Your Claim will be evaluated by a neutral third party approved by the Court, based on the information you provide and the records of PayPal. You may be contacted for further information in support of your Claim.*

You can see how much money is at stake - we published a chart showing how much members of the class are entitled to (if they submit a claim) in today's Newsflash, available on the EcommerceBytes website.




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Readers Comments

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Shop and Ship

Mon Feb 1 11:02:11 2016

Ina didn't mention that you can contact the claims administrator directly if you have questions or want more info:

Settlement Administrator
Zepeda v. PayPal Settlement Administrator
PO Box 4259
Portland, OR 97208-4259
877-854-4514

https://www.accountholdsettlement.com/Home/ContactUs

Wh
at
good does it do to rant and rave about account abuses and then hide in the shadows when it comes time to right your wrongs?

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Shop and Ship

Mon Feb 1 11:15:19 2016

The Zepeda federal lawsuit - and the attorneys representing both the plaintiffs and the defendant - are a matter of public record as are the court's rulings in this litigation that has been pending for years. Just Google the issue or parties or the case number and see the long list of web sites publicizing this filing, progression, and proposed resolution of this litigation.

I can't imagine any "court settlement" being legit that offered payouts without the claimants being properly identified and their claims being verified. Obviously if a Seller's account was suspended or closed between 2008 and 2015 then there's a good possibility that they may not have received an email from PayPal through PayPal messaging system.

Prior payouts in other settlements were tokens of a few dollars; here claims of up to $2,000 are available for payout depending upon the severity of the abuse levied by PayPal.

If you've been victimized by PayPal with account holds, suspensions, etc. then you owe it to yourself to review the pending litigation and settlement offer.

Whether or not you assert your claim does not depend upon whether you still have a vertebrate but it helps.  

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: FeelingFroggy This user has validated their user name.

Mon Feb 1 12:01:45 2016

For a few dollars (3.00) its not worth my time or energy to even think about calling or filling out anything.

I wouldn't give PreyPig the satisfaction. If they want my 3.00 they can have it. These morons know who should get the money and it should be automatically credited to the account.

But these useless losers could care less and will make you jump through the hoops just like their evil sister Fleecebay.

How many more days before we can tell Preypig to go away forever.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: iheartjacksparrow

Mon Feb 1 12:27:25 2016

If the company is not asking for your PayPal password, I don't know how they would be able to do anything nefarious with your account. And since the information on the attorneys is public record, they'd be really dumb to try to scam anyone.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: FREDDY This user has validated their user name.

Mon Feb 1 13:13:09 2016

Paypal way of getting back at you - have your accounts hacked.

paypal is a joke or has just been hacked into again - or some other major glitch.
Tried to open new paypal account.  Enter bank info - keep telling me to try again later???? Going on for a week now.  Finally talked to someone who was obviously foreign and wanted all kinds of personal info going back 20years. Then when I would not give - he wanted me to go to another site and enter my banking info there????  What is going on?  Am I just paranoid???

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Ina

Mon Feb 1 13:32:57 2016

Think back to the eBay Password Reset incident - hackers accessed an eBay database containing the exact same information the court is collecting in the PayPal case except for one thing: date of birth.

I'm not suggesting the administrator is going to abuse the information it is collecting. I'm raising the issue of whether it has the same security measures in place that PayPal boasts it has to safeguard accountholder information.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Marie

Mon Feb 1 13:50:57 2016

I think some are completely missing the point of the article.  

I read no where in the article ANY suggestion to NOT file if you have a claim to be considered.  But what is clearly being said in the article is to use caution in supplying this info on a website that may not have proper security.

And as Ina points out in her post above, it was similar info breached when Ebay was hacked back in Feb 2014.  And OMG some of the same posters here were up in arms over than hacking.  

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Ina

Mon Feb 1 14:10:02 2016

PS: re eBay password reset, the database included *encrypted* passwords - here's what eBay wrote on its announcement board:

Here’s what we know:

"This attack occurred between late February and early March and resulted in unauthorized access to a database of eBay users that includes customer name, encrypted password, email address, physical address, phone number and date of birth. The file did not contain financial information. After conducting extensive testing and analysis of our systems, we have no evidence that any customer financial or credit card information was involved. We also have no indication of a significant spike in fraudulent activity on eBay."

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: FeelingFroggy This user has validated their user name.

Mon Feb 1 15:16:29 2016

How disgusting is it that a big company like fleecebay can't tell when their system has been hacked.

How dumb does it sound when the company says sometime between late February and early March.

These bozos don't have a clue to what happen or what was stolen. These hackers don't use the information the next day. Sometimes they wait years.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: bitbybit

Mon Feb 1 15:42:16 2016

Froggy don't fool yourself into believing ebay didn't know when the hack occurred. They knew but were hoping it wouldn't come to light. With any issue drawing media attention, these corporations backpedal and come up with their collaborated PR, legal team prepared stories, I mean, statements.  

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Shop and Ship

Mon Feb 1 15:48:05 2016

Thing is, no one is requiring anyone to file a claim over the Internet.

If you have a claim and want to print out the Claim Form and then mail it in to the Case Administrator with your own hand-crafted Confidentiality Agreement then by all means have at it.

Again, it's appalling to know that so many comments have been posted on this and other web sites about how abusive eBay/PayPal is, and how they're evil twins, that someone ought to sue them but it costs too much, blah blah blah, and then here it is and the discussion revolves around a separate irrelevant incident that occurred several months ago. So what?  

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: Ina

Mon Feb 1 17:04:45 2016

Epiq Systems responded to our inquiry with a statement and links to information on its website which you can find in today's Newsflash story (link at the bottom of this blog post).

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: Ebay Seller-Ebay Buyer This user has validated their user name.

Mon Feb 1 22:46:43 2016

I never heard of a class action suit that determines what each person gets before they file.  I thought the amount is determined by how many people file and that the less people who file, the more each person gets. I think people who are owed money should file and not worry about any security issues.  I doubt that filing with the law firm will result in anyone being hacked  

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

This user has validated their user name. by: The End

Mon Feb 1 23:13:19 2016

The PayPal phishing emails is PRECISELY why I quit using PayPal.
And the ulcers all went away.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: nordicgal This user has validated their user name.
Web Site

Tue Feb 2 00:54:21 2016

I have pasted below a link to get to the PayPal Class Action Suit and claim form without going through your email from PayPal which I believe is legit anyway.  You can just paste it into your browser and it leads to a site with open class action lawsuits on it.  I had the 60 day revolving hold from PayPal for at least 1.5 years when I first started my business and they held up to 2k at any given time with no reason given.  I was furious for the whole time.  Finally, I wrote them a firm and lengthy e-mail and they finally stopped doing it.  I have also had a few temporary holds from when a crappy eBay buyer makes an unsubstantiated claim.  Darn right I have filed my claim form and I encourage eveyone that has dealt with this to do so also.

http://topclassactions.com/lawsuit-settlements/open-lawsu
it-settlements/306260-paypal-account-hold-class-action-settlement/

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: nordicgal This user has validated their user name.
Web Site

Tue Feb 2 01:23:18 2016

P.S.
You can file a basic claim and the award is from $3.00 to $341.00 or you can file an alternate claim for damages with an award up to $2000.00

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: Xander This user has validated their user name.

Tue Feb 2 01:53:10 2016

Just filed our claim using the link provided by nordicgal.

It was quick and painless. If you choose to file an alternative claim, they want to collect specifics.
For most of us paypal users, remembering or collecting data starting ten years back may be a tall order but if you were heavily abused by paypal, you probably didn't forget and might be able to supply this information easily.

Either way, we went with the std claim.

Xander does love these class action law suits. Even if it's a small amount of money, this gives you a chance to stick it to paypal!

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: nordicgal This user has validated their user name.
Web Site

Tue Feb 2 03:02:42 2016

For what it's worth Xander, I have had success filing a claim through this website.  Some time back there was one against Experian the credit reporting company and I actually received a check in the mail for $20.00.  These take forever to settle but there is little effort on a person's part to at least be heard.

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: Volvo351 This user has validated their user name.

Tue Feb 2 11:51:18 2016

How 'bout if PayPig just stops holding funds and does its job: transferring purchasing power from buyer to seller? After all, that's what USPS, Western Union, MoneyGram, etc. do via either MO's or wire transfers, right?

Perminate Link for PayPal Lawsuit Settlement Raises Security Concerns   PayPal Lawsuit Settlement Raises Security Concerns

by: Toledo Maude This user has validated their user name.

Tue Feb 2 12:15:39 2016

12 years ago or so, I and several million of my closest eBay seller friends and Paypal victims were part of a class action lawsuit that stung Paypal for 50 million or so.

Still waiting for my few bucks worth of settlement.  Checks in the mail I guess.

Even though I will never see any money, I still have feel good moments now and then when I think of Paypal/eBay being smacked down.  

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