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PayPal Adds "No Class Action Lawsuit" Clause to User Agreement
By Mike Holter
Looks like PayPal users are the latest to be been given notice they have to opt out of a mandatory binding arbitration agreement or else they will lose their right to join a class action lawsuit against the company. The deadline to opt out is December 1, 2012.
The announcement comes just days after Top Class Actions reported that eBay users have until November 9 to opt out of a new mandatory arbitration clause in eBay’s updated user agreement.
As we reported earlier, these changes to customer terms of service are being adopted by more big-name companies as a way to protect themselves from costly class action litigation. Companies generally prefer arbitration because settlements are much smaller than class action lawsuit settlements, and the arbitrator is usually hired by the company, which means it won’t bite the hand that feeds it.
Users received notice of the PayPal Policy Update via email on Saturday, which reads as follows:
The update to the User Agreement is effective November 1, 2012 and contains several changes, including changes that affect how claims you and PayPal have against each other are resolved. You will, with limited exception, be required to submit claims you have against PayPal to binding and final arbitration, unless you opt out of the Agreement to Arbitrate (Section 14.3) by December 1, 2012. Unless you opt out: (1) you will only be permitted to pursue claims against PayPal on an individual basis, not as a plaintiff or class member in any class or representative action or proceeding and (2) you will only be permitted to seek relief (including monetary, injunctive, and declaratory relief) on an individual basis.
You can opt out of the PayPal arbitration agreement by sending a letter to PayPal that contains the following information, as quoted from PayPal's Updated User Agreement:
"The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate."
Current PayPal users have until December 1, 2012 to mail the opt-out notice, while new PayPal users must postmark the opt-out notice no later than 30 days after they date they accept the User Agreement for the first time.
If you choose to opt out of the PayPal arbitration agreement, you can use the following form letter:
(add your name)
(add your address)
(add today’s date)
Attn: Litigation Department
2211 N. First St.
San Jose, CA 95131
Dear PayPal, Inc.:
This is an opt-out notice. I do not agree to PayPal’s Agreement to Arbitrate. I am writing this letter in accordance with the terms stated in the PayPal User Agreement, which require that I express my rejection and include my name, address, phone number and the email address(es) used to log in to my PayPal account(s) to which the opt-out applies in a letter signed by me and postmarked by December 1, 2012. This opt-out notice applies to:
(sign your name)
Updated October 8th, 2012
All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions