OAKLAND, Calif. (CN) – A federal judge has granted final approval of a $4 million settlement between PayPal and its users over unexplained account closures, ending six years of soap opera-style negotiations.
Senior U.S. District Judge Saundra Brown Armstrong approved the settlement in a sprawling 46-page order issued Friday, calling it “in the best interest of the settlement class.”
She also granted class counsel’s fee motion in part, and rejected a separate motion for fees by another attorney who she said had “derailed” the settlement talks.
Under the agreement, PayPal will pay $4 million, modify the disclosure of its reserve and hold practices, and clarify its dispute resolution process.
Lead plaintiff Moises Zepeda sued PayPal in 2010, claiming he logged into his PayPal account, which he used for business, and found a notification that his access to it had been limited. PayPal then closed the account, explaining only that the closure was due to security. It also kept the money in his account and the interest from it, Zepeda said.
Another user, Devinda Fernando, filed a similar lawsuit that same year against both PayPal and eBay, claiming the two companies improperly restricted and closed customer accounts without notice due to suspicious activity.
The parties went to mediation in 2011, where they reached a global settlement. But the deal fell through when Marina Trubitsky, an attorney for the Fernando plaintiffs, attempted to negotiate individual settlements with PayPal and eBay.
