PayPal Faces Lawsuit for Freezing Accounts and Taking Funds Without Explanation

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PayPal Faces Lawsuit

PayPal Faces Lawsuit for Freezing Accounts and Taking Funds

PayPal is facing a class action lawsuit from users who have had their accounts frozen and funds taken by the company without explanation. Two of the plaintiffs are from California and one from Chicago. They are accusing the company of unlawfully seizing their personal property and violating racketeering laws.

They’re now proposing a class-action lawsuit on behalf of all other users who’ve had their accounts frozen before and are seeking restitution, as well as punitive and exemplary damages, Bloomberg reports.

Lena Evans was a PayPal user for 22 years. She said the website seized $26,984 from her account six months after it got frozen without ever telling her why. She used 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.

Fellow plaintiff Roni Shemtov said PayPal seized over $42,000. She received several different explanations when she contacted the company such as using the same IP and computer as other Paypal users, selling yoga clothing at 20 to 30 percent lower than retail. or using multiple accounts. She denies the latter.

Shbadan Akylbekov, the third plaintiff, said PayPal seized over $172,000 of his money without explanation. 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. After the money disappeared from the account following a six-month freeze, PayPal allegedly sent a letter to his wife saying that 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.” It also said that the money was taken from her account “for its liquidated damages arising from those AUP violations pursuant to the User Agreement.”

Frozen PayPal accounts have long been an issue for many users. Sometimes the problem gets resolved after many phone calls and other times PayPal ends up taking those funds. One high-profile case was American poker player Chris Moneymaker’s who had $12,000 taken from his account. He was in the process of asking people to join him in a class action lawsuit before his funds were “mysteriously returned.”

Based in NYC. Points/miles enthusiast for years and actively writing about it for the last 6+ years at Danny the Deal Guru. I'm always looking out for deals. Making a few bucks is always nice, but the traveling is by far the best part of this business.

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  1. Same thing has happened to me. Freezing 11000 dollars for over a year. I need a good lawyer to take them on.

  2. They did the same thing to me 1 account belonged to my wife. company and mine also from my own company. $10,958 was taken from my account without my permission after 6 months, from my wife’s account $5,120, that’s PayPal abuse. I do not recommend anyone to use Paypal. to receive payments

    my wife and I got married calling them and showing them all the legal documents of our companies. that they don’t care

    PayPal. is not safe

  3. I just recently started using PayPal and I have won money on four different games and PayPal keeps telling me that the money has not been posted. They told me to link another card after I had already linked one. I have asked questions and keep getting the same answers. That my money might have been posted on a guest account and that I need to try getting into that account. They even sent me a website to go on. Once I did it the website doesn’t work. I have lost over three thousand dollars.

  4. Made the mistake of selling to someone outside my area and was a nightmare with Paypal being involved. Once things got straight I closed the account and Never looked back.

  5. PayPal… It’s time they get a nice slap on the wrist and are force to make some serious changes… they have been mistreating customers for years.

    I still use them… but as @Carl Pietrantonio pointed out; NEVER let money accumulate there.

  6. I did eBay for over 20 years and never let PayPal money accumulate in my account, always moving it frequently to a bank. Anyone who trusted them to hold that much bread is out of their minds, especially considering the vast number of horror stories out there for years about how crappy PayPal will or can treat people.

    • yeah I don’t get why anyone would leave that much money there, must be convenience but Paypal will pull the money from a bank or credit card if you have $0 balance, that’s the whole point.

      • That’s why I always have had it linked to an account that had little to no money, then later closed that account without them knowing. That way *I* decided when money came out of an account, not them. You can NOT trust PayPal.


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