PayPal Class Action Lawsuit Frequently Asked Questions


PayPal Class Action Lawsuit Settlement FAQs, by Girard Gibbs & De Bartolomeo

GENERAL QUESTIONS

  • What Is This "Notice" E-Mail Talking About?
  • Are You Suing Me?
  • What Is A Class Action?
  • How Do I Know If I Am Part Of The Settlement?
  • Who Was Sent The E-Mail Notice Of The Proposed Settlement?
  • How Do I Know Which Claim Form To Use?
  • How Much Will My Settlement Payment Be?
  • If I Submit A Long Form Claim, Will I Receive The Full Amount Of My Claim?
  • Can I Submit More Than One Claim Form?
  • When Will I Get My Payment Under The Settlement?
  • If I Want To Participate In The Settlement, What Do I Do?
  • If I Do Not Do Anything, What Happens?
  • How Do I Make A Claim And Receive My Payment?
  • I Have Or Had A Case Against PayPal About My PayPal Account. Can I Still Participate?
  • How Do I Tell The Court What I Think Of The Settlement?
  • I Do Not Want To Participate In The Settlement. How Do I Opt-Out Of (Exclude Myself From) The Settlement?
  • What Happens If I Do Not Opt-Out (Exclude Myself) From The Settlement Class?
  • How Do I Get In Touch With The Attorneys For The Settlement Class?
  • Do I Have To Go To Court?
    I Do Not Want To Or Cannot Go To Court.
  • Do I Have To Pay An Attorney For Any Of This?
  • The Person You Sent The Notice To Died. What Should I Do With This Notice?
  • What If I Did Not Receive An E-Mail Class Notice And Claim Form, Or I Lost It, Or My Personal Information Is Incorrect?
  • What If I Still Have Questions?
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    1. What Is This "Notice" E-Mail Talking About?

    The "Notice" you received by e-mail refers to the settlement of a class action lawsuit (discussed in the next paragraph). You received the Notice because you may be a member of the Class and as a member of the Class, you may be able to recover a cash payment by making a settlement claim. You are not being sued.

    In March 2002, a class action lawsuit was filed against PayPal, Inc. in the United States District Court for the Northern District of California in San Jose, California. The lawsuit alleged that PayPal violated a federal statute, entitled the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. 1693 et seq., including provisions requiring PayPal to supply customers with information about dispute resolution procedures and to follow certain procedures when investigating complaints of unauthorized or incorrect electronic fund transfers. For example, the lawsuit claims that PayPal did not provide account statements in the manner required by the EFTA. The lawsuit further alleges that PayPal has placed inappropriate restrictions or other limits on customers' accounts and engaged in other improper practices. Based on these practices, in addition to the claim under the EFTA, the lawsuit asserts claims under California state law for conversion, money had and received, negligence, and violations of consumer protection statutes.

    PayPal does not believe that it did anything wrong. In fact, PayPal disputes that the EFTA, originally passed in 1978 applies to its business. PayPal denies any and all liability for the claims alleged in the lawsuit.

    The parties to the action reached a Settlement and the e-mail letter you received is the "Notice" required under the law to be given to each class member that can be identified with reasonable efforts. Under the terms of the proposed Settlement if you opened a PayPal account between October 1, 1999 and January 31, 2004, you may be included in the Settlement Class.

    The Notice is provided to you so that you can decide if you want to participate in the Settlement and receive the benefits under the Settlement, or if you want to opt-out (exclude yourself) from the Settlement Class. [Back]

    2. Are You Suing Me?

    YOU ARE NOT BEING SUED. If you opened a PayPal account between October 1, 1999 and January 31, 2004, then under the terms of the Settlement you may be included in the Settlement Class. The Notice you received via email is the "Notice" required under the law to be given to each class member that can be identified with reasonable efforts. [Back]

    3. What Is A Class Action?

    In a class action, one or more people, called Class Representatives (in this case Roberta Toher and Jeffrey Resnick), sue on behalf of people who have allegedly similar claims. All of these people are members of the Class. The law requires that notice be given to each class member that can be identified with reasonable efforts so that each class member can make an informed decision as to whether to participate in the settlement or exclude themselves (also referred to as "opt out") of the settlement. One court resolves the issues for all Class Members, except for those who exclude themselves from the Class. United States District Court Judge Jeremy Fogel is in charge of this class action. [Back]

    4. How Do I Know If I Am Part Of The Settlement?

    The Court decided that everyone who fits this description is a Class Member:

    All Persons who opened a PayPal account between October 1, 1999 and January 31, 2004.

    In other words, you are a Class Member if you opened a PayPal account at any time between October 1, 1999 and January 31, 2004. Excluded from the Class are any judicial officer to whom this Litigation is assigned; PayPal and any of its affiliates; any current or former employee, officer, or director of PayPal; any residents of Austria, Belgium, Denmark, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, The Netherlands, or the United Kingdom; and all Persons who timely and validly request exclusion from the Class pursuant to the Notice disseminated in accordance with the Notice Order. [Back]

    5. Who Was Sent The E-Mail Notice Of The Proposed Settlement?

    PayPal made a reasonable effort to email notice to all persons who opened a PayPal account between October 1, 1999 and January 31, 2004, except those resident in the countries excluded from this settlement, at the last primary email address known to PayPal. Notice will be published in USA Today, Newsweek, and People Magazine. [Back]

    6. How Do I Know Which Claim Form To Use?

    To receive a payment, you must submit an online Claim Form. Depending upon your situation and circumstances, you will be eligible to submit a claim either for the Statutory Damage Fund or the Dispute Resolution Damage Fund. If you are eligible to submit a claim for the Dispute Resolution Damage Fund, you have a choice between the Long Claim Form or the Short Claim Form. The information provided directly below may help you in determining your eligibility between the two funds, and if you are eligible as a "Dispute Resolution Claimant," in making your decision regarding the two claim forms for the Dispute Resolution Fund.

    a. Dispute Resolution Claims (Long Form and Short Form Claims):

    You are a "Dispute Resolution Claimant" and can make a Long Form or Short Form claim if you:

    (i) experienced or reported to PayPal an unauthorized or incorrect electronic transfer to or from their PayPal account including, without limitation, electronic transfers initiated by (a) you ; (b) PayPal in connection with, among other things, chargebacks, refunds, buyer complaints, PayPal's Seller Protection Policy, Buyer Complaint Process and/or Buyer Protection Policy; or (c) any third party;

    (ii) had access to your PayPal account improperly, incorrectly or erroneously limited or restricted, in whole or in part; or

    (iii) made a request for information in connection with PayPal's restriction or limitation of your PayPal account or regarding an incorrect or unauthorized electronic transfer to which PayPal did not respond at all or did not respond to your satisfaction.

    If you make a valid Short Form Claim, you will receive a payment of $50. If you make a Long Form Claim, you will have the opportunity to provide documentation in support of your claim and thus may be able to receive a larger amount. Both the Long Form Claim Form and the Short Form Claim Form requires you to provide certain identifying information and sign a statement under penalty of perjury authenticating your claim, which may be subject to verification by PayPal's records. The amount paid out for Long Form and Short Form claims will depend on the number of claims received and the aggregate amount of such claims. For more details, review the Plan of Allocation.

    b. Statutory Damage Claims

    If you are not qualified to make a Long or Short Form Claim (Dispute Resolution claim), you can make a claim for a payment from the Statutory Damage Fund. The Statutory Damage Fund Claim Form requires you to provide certain identifying information and sign a statement under penalty of perjury authenticating your claim, which may be subject to verification by PayPal's records. To make a claim for payment from this fund, please complete and submit the Statutory Damage Fund Claim Form. [Back]

    7. How Much Will My Settlement Payment Be?

    The amount of your settlement payment depends on whether you are a Dispute Resolution Claimant or seeking recovery under the Statutory Damage Fund (see the Plan of Allocation for details). If you are a Dispute Resolution Claimant, the amount of your payment will also be affected by whether you submit the Short Claim Form or the Long Claim Form.

    If you are NOT a Dispute Resolution Claimant, you may make a claim against the Statutory Damage Fund by submitting the Statutory Damage Fund Claim Form. The Statutory Damage Fund provides compensation for potential statutory damages under the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. 1693 et seq. Statutory damages under the EFTA are limited by law to no more than $500,000 for any class of individuals claiming the same "failure to comply." Under the Settlement, the parties negotiated the Plan of Allocation designating $1 million to be distributed equally among those who make timely, valid claims The amount of your payment will depend on the number of claims made.

    If you ARE a Dispute Resolution Claimant, you may choose whether to submit the Short Claim Form or the Long Claim Form.

    The Short Claim Form allows you to receive an automatic payment for providing a minimal amount of information. If you make a timely, valid claim using the Short Claim Form, you will receive a payment of $50, unless the amount needed to pay all of the Short Form claims exceeds the Short Form Fund. In that case, the Short Form Fund of approximately $2.15 million will be divided equally among all Short Form Claimants. If the amount needed to pay all of the Short Form claims is less than the amount of the Short Form Fund, the money left over will be added to the Long Form Fund.

    The Long Claim Form is intended for people who believe that they have larger claims and want to provide detailed information and supporting documentation. If you make a timely, valid claim using the Long Claim Form, an independent, court-approved claims administrator will evaluate your claim and determine the amount you should receive. In making this determination, the claims administrator will take into account the amount of damages you claim; the nature of your complaint; the quality of the supporting documentation you provide; your recoverable damages; the probability that you would be successful on your complaint if presented in a court of law; and such other factors that the claims administrator considers relevant. A retired judge who served as the mediator in this case will oversee and approve the methodology and procedures used by the claims administrator. If the amount needed to pay all of the Long Form claims is less than the amount of the Long Form Fund, which is approximately $2.15 million, the money left over will be added to the Short Form Fund. [Back]

    8. If I Submit A Long Form Claim, Will I Receive The Full Amount Of My Claim?

    No. In a settlement, compromises are made by the opposing parties in order to resolve the litigation. The court-approved claims administrator will make determinations regarding how much money each Long Form Claimant receives. In doing so, the claims administrator will take into account the amount of damages claimed, the nature of the injury complained of, the quality of the proof submitted in support of the claim, the recoverable damages, the relative probability of success on the merits in a legal action, and such other factors as the claims administrator deems relevant. The claims administrator also will develop and implement reasonable measures to detect and potentially reject claims submitted by class members who may have misused the PayPal system or defrauded PayPal or PayPal users. The methodology used by the claims administrator to allocate the money will be reviewed by the Court for its approval. [Back]

    9. Can I Submit More Than One Claim Form?

    Generally, no. You may only submit one claim form. You must decide whether you are a Dispute Resolution Claimant (see the Plan of Allocation) or not. If you are a Dispute Resolution Claimant, you further must choose whether to submit a Short Claim Form or a Long Claim Form. If you are not a Dispute Resolution Claimant, you may submit a Statutory Damage Claim Form. [Back]

    10. When Will I Get My Payment Under The Settlement?

    Assuming the settlement is approved and no appeals are taken, we estimate that you will receive your payment sometime in January 2005. Claims cannot be paid until after all of the following happens: (1) the claims period ends, (2) the Court orders final approval of the Settlement, and (3) the time has passed for anyone to appeal the settlement. The Court's final approval of the settlement is ordered only after the Court reviews the Settlement, reviews the class members' comments to the Settlement, and holds a hearing in open court on the Settlement. The Court has scheduled the final approval hearing for September 24, 2004 at 9:00 a.m.

    If the Court grants final approval on or about September 24, 2004, and there are no appeals from the Court's order granting final approval, Plaintiffs' Counsel expect that the payments will be sent out by the end of January 2005. [Back]

    11. If I Want To Participate In The Settlement, What Do I Do?

    If you want to participate in the settlement and receive a payment, you must submit an online Claim Form. Click here to submit an online Claim Form. [Back]

    12. If I Do Not Do Anything, What Happens?

    If you do not submit a claim and you do not opt out, you will remain in the class, but you will not receive a settlement payment and you will release all of your rights relating to the legal claims in this case. [Back]

    13. How Do I Make A Claim And Receive My Payment?

    If you opened a PayPal account between October 1, 1999 and January 31, 2004, you can make a claim and receive a payment. If you do not make a claim, you will not receive a payment. To make a claim, complete and submit the online Claim Form contained on this website. The Claim Form must be completed by October 23, 2004. The Claim Form will require you to print out, sign, and mail in a certification and signature page. That page must be mailed by November 1, 2004 to:

    PayPal Litigation
    Claims Administrator
    PO Box 9000 #6248
    Merrick, NY 11566-9000

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    14. I Have A Case Against PayPal About My PayPal Account. Can I Still Participate?

    If you are involved in your own legal case against PayPal, promptly consult your attorney for your individual case, and contact us at paypalsettlement@settlement4onlinepayments.com for details. [Back]

    15. How Do I Tell The Court What I Think Of The Settlement?

    You may submit written comments in support of or in opposition to any aspect of the Settlement. Your written comments should (1) include your name and address; (2) include the reference In re PayPal Litigation, Case No. CV-02-1227-JF (PVT); and (3) be signed by you.

    Your written comments in support of the settlement or in opposition to it must be received no later than September 3, 2004 by each of the following: (1) The Court, (2) Plaintiffs' Counsel and (3) Defendants' Counsel at the following addresses:

    The Court:

    Clerk of the Court
    United States District Court for the Northern District of California
    280 South First Street
    San Jose, California 95113

    Plaintiffs' Co-Lead Counsel:

    PayPal Class Action Settlement
    Girard Gibbs & De Bartolomeo LLP
    601 California Street, Suite 1400
    San Francisco California 94108

    PayPal's Counsel:

    PayPal Class Action Settlement
    Morgan Lewis & Bockius LLP
    One Market
    Spear Street Tower
    San Francisco, California 94105

    If you just have a comment, you can also email it to Plaintiffs' Counsel at

    paypalsettlement@settlement4onlinepayments.com.

    The Court will hold a hearing to decide whether to grant final approval of the proposed settlement. The hearing is scheduled for September 24, 2004 at 9:00 a.m., before the Honorable Jeremy Fogel, United States District Judge, United States District Court for the Northern District of California, Courtroom 3, 5th Floor, 280 South First Street, San Jose, California 95113. Settlement Class Members will be permitted to speak at the hearing, but only if they follow the procedures in Section 12 of the Class Notice. The Class Notice may be downloaded from the homepage of this website. [Back]

    16. I Do Not Want To Participate In The Settlement. How Do I Opt-Out Of (Exclude Myself From) The Settlement?

    The opt-out deadline is September 7, 2004. If you choose to opt-out (exclude yourself) from the Settlement Class, you will not receive the benefits of the Settlement, and your claims will not be released. People who exclude themselves may choose to be part of some other lawsuit against PayPal about the same legal claims as in this case. If you wish to opt-out (exclude yourself) from the Settlement Class, you must send a written request for exclusion so that it is received by September 7, 2004, to:

    Co Lead Counsel:

    PayPal Class Action Settlement
    Girard Gibbs & De Bartolomeo LLP
    601 California Street, Suite 1400
    San Francisco, California 94108

    PayPal's counsel:
    PayPal Class Action Settlement
    Morgan Lewis & Bockius LLP
    One Market
    Spear Street Tower
    San Francisco, California 94105

    Your exclusion request must contain your name and address; be signed by you; and include the reference "In re PayPal Litigation, Case No. CV-02-1227-JF (PVT)."

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    17. What Happens If I Do Not Opt-Out Of (Exclude Myself From) The Settlement Class?

    If you meet the definition of the Settlement Class and do not opt-out, you will remain in the Settlement Class. This means you will be able to make a claim and receive payment.

    Also, the Court will enter a judgment dismissing the lawsuit against PayPal, and releasing all claims demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, matured or unmatured, at law or in equity, existing under federal or state law, that were or could have been asserted against PayPal and its past and present partners, affiliates, predecessors, successors, assigns, parents, subsidiaries, officers, directors, attorneys, and employees, under the Electronic Fund Transfer Act, California Business and Professions Code 17200 et seq.; the California Consumers Legal Remedies Act, Cal. Civ. Code 1750 et seq.; and for PayPal's alleged conversion, breach of the User Agreement or other contract, money had and received, unjust enrichment, and negligence under California law or any other state or federal law arising out of, among other things, PayPal's restrictions or limitations of accounts; PayPal's dispute resolution policies, practices and procedures; PayPal's debit of accounts following the receipt of chargebacks, buyer complaints, reports of unauthorized access or in connection with its Seller Protection Policy, Buyer Complaint Process or Buyer Protection Policy; PayPal's alleged conversion of funds; and PayPal's compliance with the Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., or any similar legislation arising under the laws of any state. You will be permanently barred from bring any such claims that arose prior to February 1, 2004. With regard to accounts that were limited prior to February 1, 2004, however, you will not be releasing claims to recover any balance that remained in the account 180 days after the account was initially limited.

    If you are pursuing your own case against PayPal, promptly consult your attorney about this Settlement.

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    18. How Do I Get In Touch With The Attorneys For The Settlement Class?

    You can contact Plaintiffs' Counsel by sending an e-mail to paypalsettlement@settlement4onlinepayments.com. [Back]

    19. Do I Have To Go To Court? I Do Not Want To Or Cannot Go To Court.

    You do not have to go to court. To remain in the settlement, you do not have to do anything. To receive a cash payment, all you have to do is submit an online Claim Form, as provided for in the Class Notice. [Back]

    20. Do I Have To Pay An Attorney For Any Of This?

    No. You are not responsible for paying any attorneys' fees or expenses out of your own pocket. The fees and expenses of the Plaintiffs' attorneys in connection with this case will be paid from the Settlement Fund in amounts approved by the Court. [Back]

    21. The Person That Was Sent The Notice Has Died. What Should I Do With This Notice?

    If you are the beneficiary of the deceased person's estate, you may recover under this Settlement on his or her behalf. To do so, submit a copy of the death certificate and power of attorney or other legal documentation to show that you are authorized to act on behalf of the estate. [Back]

    22. What If I Did Not Receive An E-Mail Class Notice And Claim Form, Or I Lost It, Or My Personal Information Is Incorrect?

    If you need a new Notice and/or Claim Form, you may download it from the homepage of this website.

    If you just need to provide updated information about yourself or your address, simply include it on the online Claim Form when you submit it (or write it on your exclusion request or comment, if applicable, when you mail it in). [Back]

    23. What If I Still Have Questions?

    If you still have questions, feel free to contact us at paypalsettlement@settlement4onlinepayments.com.