Say "No" to PayPal's Disputes & Arbitration Scam
Bullies don't like to fight fair. Bullies claim they will let you take them on, but when you try, you are in for a surprise: Bullies don't fight fair -- and neither does PayPal. When you sign up for a PayPal account, you are already at a significant disadvantage. Why? In order to sign up for a PayPal account, you had to agree to the PayPal User Agreement (Terms of Service Agreement). And when you agreed to the PayPal User Agreement, you agreed that if you had any problems or disputes with PayPal, you had to file a complaint against them on THEIR OWN TERMS. Surprise. PayPal's "terms" are not fair.
If you KNEW if was going to rain, you would bring in umbrella with you, right? Well, PayPal has attempted to limit their exposure to costly legal actions by forcing you to waive your right to file legal complaints against PayPal when they cause you harm. PayPal's "Disputes With PayPal" section (PayPal User Agreement) is their version of an umbrella for a rainy day.
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In the real world, if a company causes a person harm, that person is free to challenge that company in court or through any other means which are legal and acceptable. Not so with PayPal. Let's take a look at PayPal's User Agreement -- specifically, their "Disputes With PayPal" section:
Here is the FIRST option PayPal gives you when you have a dispute or problem with them:
14.1 Contact PayPal First. If a dispute arises between you and PayPal, our goal is to learn about and address your concerns and, if we are unable to do so to your satisfaction, to provide you with a neutral and cost effective means of resolving the dispute quickly. Disputes between you and PayPal regarding our Services may be reported to Customer Service online through the PayPal Help Center at any time, or by calling (402) 935-2050 from 6 AM to midnight Central Time.
This first option that PayPal gives is obvious. Of course, you should contact PayPal first at the first sign of trouble. Even this website recommends this. However, the problem is PayPal rarely resolves problems with users who contact them. Send an email to PayPal and it goes straight to New Delhi, India where it is answered by some kid with NO authority to help you (the famous PayPal "form emails."). Second, PayPal gives you a customer service number THAT IS NOT FREE TO CALL. PayPal knows that the normal person is going to avoid calling long distance. That person is more likely to use email. And PayPal sends all of those emails to their contracted customer service center in India -- where no help is offered.
A smaller percentage of persons will call the PayPal customer service number provided by PayPal -- which, again, is not free to call. PayPal immediately begins stonewalling you there as well. As soon as you call, the minutes and the charges start adding up. It takes an average of FIVE minutes or longer to even get in touch with a live person (after navigating the cumbersome menu options). When you are finally connected, you are serviced by a low level, powerless customer service representative whose only job is to get you off the line as quickly as possible.
These customer service representatives represent the lowest level of PayPal employee -- the only power that they have is to submit your account to review with a higher department (thankfully, Screw-PayPal.com provides DIRECT contact information to these various offices HERE.) Customers are cut off with warning (forcing them to call again and again), put on hold for long periods of time without warning, and forced to repeat information over and over again. In the end, your problem is NOT resolved.
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PayPal customer service will give you a long list of "tasks" to complete in the hopes of stalling you and wearing you down. If you complete these "tasks" or have further questions, you are given information that is completely different than what the previous customer representative told you. While you are dancing from one foot to the other, PayPal has forgotten all about you. Contacting PayPal through the means that they provide is a dead end. It's an end designed to wear you down and force you to give up.
SAY "No" to calling PayPal customer service or using their email service when logged into your PayPal account. Instead, use this sites PAYPAL CONTACT INFORMATION to contact PayPal DIRECTLY!
If your PayPal problem is not solved through direct contact with PayPal, PayPal then gives you another unfair option:
14.2 Alternative Dispute Resolution. If you are unable to resolve your issue by working directly with us, PayPal will consider reasonable requests to resolve disputes through alternative dispute resolution procedures, such as mediation or binding arbitration as alternatives to litigation. Accordingly, you and PayPal agree to resolve any claim in accordance with this Agreement, or as otherwise agree to in writing.
14.3 Arbitration. For any claim (excluding claims for injunctive or other equitable relief) where the total amount of the award sought is less than $10,000.00 USD, the party requesting relief may elect to resolve the dispute in a cost effective manner through binding non-appearance-based arbitration. If a party elects arbitration, that party will initiate such arbitration through an established alternative dispute resolution ("ADR") provider mutually agreed upon by the parties. The ADR provider and the parties must comply with the following rules: a) the arbitration shall be conducted by telephone, online and/or be solely based on written submissions, the specific manner shall be chosen by the party initiating the arbitration; b) the arbitration shall not involve any personal appearance by the parties or witnesses unless otherwise mutually agreed by the parties; and c) any judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction.
This arbitration clause is one of the biggest scams of all time. This same arbitration clause was struck down by a California District Court in 2004 because PayPal previously required arbitration to be conducted in person. That's right, if you had a dispute with PayPal, and the amount that you were seeking was less than $10,000, you had to fly out to California and attend the arbitration meeting personally. How many persons do you think did that? Right.
In response to the court ruling, PayPal modified this section to allow arbitration via telephone, written submissions or online (Do they mean arbitration using Yahoo! Chat or something?).
This option exists for the same reason as to why PayPal's customer service and email service are so difficult to use: it's designed to wear you down or force you to give up. PayPal uses the American Arbitration Service -- the most expensive arbitration service in America. You must pay a portion of the costs for this arbitration. This can cost you over $200. That does not include other fees and cost associated with the presentation of your case. The results are not guaranteed and you are not guaranteed a fast hearing or a fast answer to your dispute. You are totally at their mercy.
Other unknowns include this arbitration service's relationship with PayPal, the percentage of the time they side with PayPal and the arbitration service's employees relationship with individual PayPal employees. PayPal is asking you to submit to a process where you are at an extreme disadvantage and a process where the convenience is totally with PayPal -- not with you, the customer.
Last, most PayPal disputes are for under $500. PayPal freezes and limits the accounts of millions of person with small amounts -- it adds up for PayPal in volume, but for the individual persons who cannot afford to loose this money, it's a big issue for them. The cost of this arbitration process alone (not to mention the added inconvenience of it) could very well add up to what you are seeking from PayPal. That makes the whole process moot from the beginning. PayPal knows this and that is why they offer it as a "solution." It's a solution for them to make you go away and not come back. Meanwhile, they get to keep your money and the money of millions of other hard working persons.
Say "NO" to PayPal's arbitration process. Instead, use the RESOURCES of this website to file complaints that go somewhere. Force PayPal's hand by getting the help you need directly!
The last option PayPal gives you is to file a complaint against them in court. It sounds fair enough, right? But wait. It's not fair. Take a look at this:
14.4 Law and Forum for Disputes. Except as otherwise agreed by the parties or as described in section 14.3 above, you agree that any claim or dispute you may have against PayPal must be resolved by a court located in Santa Clara County, California. You agree to submit to the personal jurisdiction of the courts located within Santa Clara County, California for the purpose of litigating all such claims or disputes. This Agreement shall be governed in all respects by the laws of the State of California, without regard to conflict of law provisions.
14.5 Improperly Filed Litigation. All claims you bring against PayPal must be resolved in accordance with section 14 of this Agreement. All claims filed or brought contrary to section 14 shall be considered improperly filed a breach of this Agreement. Should you file a claim contrary to section 14, PayPal may recover attorneys' fees and costs (including in-house attorneys and paralegals) up to $1,000.00 USD, provided that PayPal has notified you in writing of the improperly filed claim, and you have failed to promptly withdraw the claim.
Again, PayPal inserts this clause into their User Agreement as a means of wearing you down and forcing you to give up. If you are seeking more than $10,000 against PayPal (for example, money in that amount that PayPal has frozen or limited access to), you must file your lawsuit in California -- regardless of where you live.
Like the other dispute "alternatives!" that PayPal offers, this one is designed to cost you as much money as possible in the hopes that you will give up realizing that even if you win, you will have paid so much money to try to get your original sum back, it would not be worth it.
As an added bonus to PayPal customers attempting to invoke their Constitutional rights, PayPal adds a clause saying that if you do have the audacity to file legal charges against them in your home state (where it is most convenient to you and where PayPal has a license to operate and conduct business), PayPal threatens you with $1,000 in added bills should you loose your case.
If you file a court case against PayPal in your home state, and PayPal responds to your filing and shows up for court, they want you to pay $1,000 of their attorney's fees. This amount would be higher had a California court not struck down their original amount (don't ask).
Say "NO" to filing a court case in California -- especially if you do not live there! You have a right to file a complaint against PayPal in any court in the United States of America. It is not only your right as a citizen, PayPal enjoys the benefits of doing business in your state. Therefore, it is jurisdictionally correct for you to file your court case in a state where PayPal is licensed to do business.