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By Paul Bezaire - How I sued PayPal in my local small claims court and won.
Rights Reserved, Paul Bezaire via NoPayPal.com/PayPalSucks.com

Having trouble with PayPal, I filed suit against them and got a $150.00 judgment. I had purchased an item on eBay using the PayPal payment system. One of the reasons for using PayPal was to avail MYSELF of their Money Back Guarantee to insure that the product I bought would be in good working order. When PayPal did not honor their Money Back Guarantee for the item, which turned out to be defective, I had no choice but to sue them in Small Claims Court for the amount of $150.00.

Their attempted defense to my filing a Small Claims action, in Los Angeles County, was based upon their contention that: “When he signed up for the account, Plaintiff agreed to the User Agreement for PayPal service specifically including the Legal Disputes section of the User Agreement” that said all law suits must be filed in Santa Clara, County, CA.

A Federal Court had already found that their User Agreement was unconscionable under California law. Referring to the provisions of the User Agreement the court said ". . .these provisions made the User Agreement unconscionable, and appear to represent an attempt by PayPal to insulate itself contractually from any meaningful challenge to its alleged practices." The Small Claims court awarded me judgment in the amount of $150.00 plus costs.

After being served with the Summons and Complaint, PayPal began firing all their guns at me. They began sending letters to the court challenging venue. They attempted to scare me into dismissing the lawsuit. One letter said in part, “If we do not hear from you , we intend to file a Motion to Compel Arbitration, along with a request that PayPal be reimbursed for its attorneys fees and costs associated with enforcing the terms of the User Agreement” Another said that, “Plaintiff entered into a binding contract with PayPal according to which he agreed that for disputes of $10,000 or less, he would resolve the matter through binding arbitration or by filing a lawsuit in a court of competent jurisdiction in Santa Clara County, California.” I ignored that contention and filed my complaint in Los Angeles county.

Subsequently, PayPay again wrote to the court challenging venue. Were they not aware that the Federal Court in Case C-02-1227 JF (Pvt) in 2002 said the following with respect to the User Agreement? "Having considered the terms of the User Agreement generally and the arbitration clause in particular, as well as the totality of the circumstances, the Court concludes that the User Agreement and arbitration clause are substantively unconscionable under California law and that arbitration cannot be compelled herein."

Trial was held on 10/20/2004. PayPal did not appear for the trial. It appeared that the expense of sending someone from San Jose to Los Angeles did not appeal to them.

Being dissatisfied with the judgment against them they filed a document requesting the court to Correct or Vacate the judgment which was eventually dismissed and reinstated by another judge.

I am not an attorney but believe that anyone, at least in California, can do the same thing I did for amounts under $5,000.00.

I was insulted when PayPal sent me a 7-page confidential agreement to sign wherein they offered to pay me my $202.00 if I would sign the agreement. The agreement prohibited me from telling anyone about the terms of the agreement. They must of really thought I was that stupid as to sign something that would prohibit me from sharing this information with other people who got stuck by PayPal.

More information at Paul's site, including a helpful link on how to sue in a small claims California court.

All Rights Reserved, Paul Paul Bezaire via NoPayPal.com/PayPalSucks.com. Limited quoting and copying of this story is allowed, provided a link back to this page or site is prominently provided.