PayPal Pays for Freezing Accounts

SAN JOSE, Calif. – Payment processor PayPal Inc. has been ordered by a federal judge in the Northern District of California in San Jose to arrange a $9.25 million fund for consumers who allege that the processor randomly froze their accounts between 1999 and January 2004.

Two separate lawsuits were filed in 2002 by Roberta Toher and Jeffrey Resnick claiming that the company was in the habit of restricting, freezing or closing customer accounts without a legitimate reason. The case was then consolidated and turned into a class action suit.

On July 12, the court preliminarily approved the proposed settlement and directed that class members be given notice of the settlement.

In recent years, PayPal has become a popular method for transferring and receiving monies over the Internet.

Per the judge's order, consumers can log onto a "PayPal Litigation Settlement Website" to redeem part of the money they claim was frozen by PayPal.

According to the attorney representing the plaintiffs in the case, consumers who log on to the site will be required to document their experience with PayPal in order to redeem a portion of any related funds.

As part of the judge's ruling, PayPal was required to notify its customer base via email of the new website, although some users claim the mass emailer more closely resembled a solicitation from a spam hoax than a legitimate corporate correspondence.

In the email, PayPal representatives continue to deny any wrongdoing against its more than 45 million consumers.

Recovered funds can range from between $50 to up to $1 million, depending on the experience of the user and whether the complaint is filed via a long form or a short form.

"We believe that based on the information we've been provided that it's a fair settlement," said A. J. De Bartolomeo, an attorney for one of the plaintiffs.

The settlement includes users who feel that PayPal either treated them unfairly or did not respond to their complaints in an efficient manner, De Bartolomeo stated.

By Monday, PayPal was warning users that the settlement website was experiencing delays and other problems due to an extremely high volume of traffic.

The website also states that the deadline to submit an online claim is Oct. 23.

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Federal Appeals Court Vacates FTC 'Click to Cancel' Rule Pending Review

The U.S. Court of Appeals for the 8th Circuit on Tuesday vacated the Federal Trade Commission’s “click-to-cancel” rule aimed at making it easier for consumers to cancel online subscriptions, pending further review.

FSC Drops Florida AV Lawsuit in Wake of SCOTUS Decision

A U.S. district court judge granted on Tuesday a motion by Free Speech Coalition to dismiss the trade association’s lawsuit over Florida’s age verification law, a case that had been on hold pending the Supreme Court’s recent ruling on the constitutionality of state AV laws.

Ukrainian President Responds to Porn Legalization Petition

President Volodymyr Zelensky responded Tuesday to an OnlyFans model’s petition to decriminalize pornography in Ukraine, stating that he would wait for the legislative process to play out “in accordance with established procedure.”

Only Tax Deductions Joins Pineapple Support as Sponsor

Adult industry accounting firm Only Tax Deductions has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

Adult Empire Launches 'Conversations' Podcast Series

Adult Empire has launched a new official podcast series hosted by Nicole Chappelle and Charlie.

Sex Work CEO Launches 'Teams Plan' for AI Assistant

Sex Work CEO has introduced the new Teams Plan for its AI-powered, NSFW text generator, GPTease.

2025 XBIZ Amsterdam Website Launches With Call for Speakers

XBIZ is pleased to announce that the website for its annual European conference, XBIZ Amsterdam, is now live.

NC Governor Vetoes Bill Targeting Adult Industry, Override Possible

North Carolina Governor Josh Stein today vetoed a bill imposing new regulations that adult industry observers have warned could push adult websites and platforms to ban most adult creators and content.

25,000 Sign Petition to Legalize Pornography in Ukraine

An OnlyFans model’s petition to decriminalize pornography in Ukraine has amassed the 25,000 signatures required for official consideration by President Volodymyr Zelensky.

WannaCollab Joins Pineapple Support as Supporter-Level Sponsor

WannaCollab has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

Show More