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Lawsuits & Litigation

Lawsuit: PayPal Accused of Unlawfully Freezing User Accounts and Funds

— January 18, 2022

PayPal is at the center of a lawsuit over claims it froze a number of accounts and took funds from users.

Earlier this week, Paypal was hit with a lawsuit by three people who claim the company “accounts frozen and funds taken…without explanation.” Two of the plaintiffs are from California, and another is from Chicago. All three allege in the federal suit that the company “unlawfully seized their personal property and violated racketeering laws.” At the moment, they are seeking punitive and exemplary damages, as well as restitution.

Hundred dollar bills; image by Mackenzie Marco, via
Hundred dollar bills; image by Mackenzie Marco, via

One of the plaintiffs is Lena Evans. According to her, she has been a PayPal user for 22 years. In the complaint, she alleges the company “seized $26,984 from her account six months after it got frozen without ever telling her why.” The suit states she had “been using PayPal to buy and sell clothing on eBay, to exchange money for a poker league she owns and for a non-profit that helps women with various needs.”

Roni Shemtov is another plaintiff. She alleges PayPal “seized over $42,000 of her money and never got an acceptable reason for why her account was terminated.” When she reached out to the company, she received a handful of explanations. For example, one customer representative told her “it was because she used the same IP and computer as other Paypal users, while another said it was because she sold yoga clothing at 20 to 30 percent lower than retail.” Another told her “it was because she used multiple accounts, which she denies.”

The third plaintiff is Shbadan Akylbekov. According to his accusations, “PayPal seized over $172,000 of his money without giving him any explanation why the account got limited in the first place.” He said he “used the account of a company his wife owns to sell Hyaluron pens, which are needle-less pens that inject hyaluronic acid into the skin.” When the funds vanished from the account after a six-month freeze, the company allegedly “sent his wife a letter that says she ‘violated PayPal’s User Agreement and Acceptable Use Policy (AUP) by accepting payments for the sale of injectable fillers not approved by the FDA.’” On top of that, the company told the couple that the money taken from the account was “for its liquidated damages arising from those AUP violations pursuant to the User Agreement.”

The complaint further states:

“Plaintiffs bring this class action against Defendant PAYPAL, INC. (“PayPal”) to recover damages and other relief available at law and in equity on behalf of themselves, as well as on behalf of the members of the class defined herein… This action stems from Defendant’s widespread business practice of unilaterally seizing funds from its clients’ financial accounts, without cause, and without any fair or due process…PayPal places a ‘hold’ on the Plaintiffs’ own funds in their own PayPal accounts. PayPal has failed to inform Plaintiffs and members of the class of the reason(s) for the actions PayPal has taken, even telling Plaintiffs and members of the class that they will ‘have to get a subpoena’ to learn the simple information as to why PayPal was holding, and denying Plaintiffs, access to their own money.”


PayPal faces lawsuit for freezing customer accounts and funds

PayPal stole users’ money after freezing, seizing funds, lawsuit alleges

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