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

FSC Unpacks SCOTUS Age Verification Ruling in Webinar

The Free Speech Coalition conducted a public webinar Tuesday to help adult industry stakeholders understand the Supreme Court’s recent decision in FSC v. Paxton, and its potential implications.

UK Lawmaker Calls for Appointment of 'Porn Minister'

Baroness Gabrielle Bertin, the Conservative member of Parliament who recently convened a new anti-pornography task force, is calling for the appointment of a “minister for porn,” according to British news outlet The Guardian.

FSC Toasts Jeffrey Douglas for 30 Years of Service

n the very same evening when the adult industry was hit hard by the Supreme Court ruling supporting Texas’ controversial age verification law, HB 1181, members of the Free Speech Coalition board, staff and supporters gathered to celebrate Jeffrey Douglas’ 30 years as board chair — a fitting reflection of his reputation as an eternal optimist.

TTS Opens UK Testing Location

Talent Testing Service (TTS) has opened a new U.K. location in Ware, Hertfordshire.

FSC: Age-Verification Laws Go Into Effect South Dakota, Georgia, Wyoming on July 1

The Free Speech Coalition (FSC) has published a statement regarding new age verification laws set to go into effect tomorrow in South Dakota, Georgia, and Wyoming.

FSC Responds to Supreme Court Decision on Texas AV Law

The Free Speech Coalition (FSC) has released a statement responding to last week's Supreme Court decision on FSC v. Paxton, the Texas age verification law.

Sex Work CEO Debuts Upgraded 'GPTease' AI Assistant

Sex Work CEO has introduced the new Canvas in-chat editing feature to its AI-powered, NSFW text generator, GPTease.

UPDATED: Supreme Court Rules Against Adult Industry in Pivotal Texas AV Case

The U.S. Supreme Court on Friday issued its decision in Free Speech Coalition v. Paxton, striking a blow against the online adult industry by ruling in support of Texas’ controversial age verification law, HB 1181.

North Carolina Passes Extreme Bill Targeting Adult Sites

The North Carolina state legislature this week ratified a bill that would impose new regulations that industry observers have warned could push adult websites and platforms to ban most adult creators and content.

Supreme Court Ruling Due Friday in FSC v. Paxton AV Case

The U.S. Supreme Court will rule on Friday in Free Speech Coalition v. Paxton, the adult industry trade association's challenge to Texas’ controversial age verification law, HB 1181.

Show More