EcommerceBytes-NewsFlash, Number 2304 - June 08, 2010     2 of 5

Firm Files Class Action Lawsuit against eBay for PayPal Holds

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The law firm of Freed & Weiss LLC has filed a lawsuit against eBay and PayPal on behalf of their clients, Ronya Osman and Brian Patee. The lawsuit charges that PayPal's practice of "holding" funds for up to 180 days in the accounts is fraudulent because of the "systematic and arbitrary manner in which the freezing is done and the lack of information shared with affected customers."

The lawsuit claims PayPal is holding $1500 of Plaintiff Ronya Osman funds, and had held $750 of plaintiff Brian Pattee's funds from about September 2009 til March 12, 2010.

The lawsuit says PayPal's actions violate the Electronic Funds Transfer Act, stating that PayPal is a financial institution within the meaning of the EFTA, and that plaintiffs are consumers protected by the EFTA. "Defendant has been unjustly enriched at the expense of and detriment to Plaintiffs and the Class by wrongfully collecting money to which Defendant, in equity, is not entitled."

The complaint is on the law firm's website in PDF format.

The law firm is looking for other plaintiffs, stating:

"F&W is litigating a putative class action against PayPal for PayPal holding seller's money up to 180 days (sometimes even longer). PayPal often does not provide a basis for why it is holding the funds and will also tell the seller to get a subpoena to find out why their money is frozen. If you have had money held by PayPal, please contact us for information about the case."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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