I recently set up a PayPal account to process credit card payments. I signed up and billed my customer for $2500. Then PayPal notified me for the first time that it was only paying $500 of a $2500 payment and would withhold payment on the balance for 21 days. Moreover, PayPal immediately deducted its fee for processing the $2500. I'm thinking a class action lawsuit should be filed against PayPal. From a strategic perspective, a class action lawsuit is far more difficult to have dismissed than an individual lawsuit and can result in extraordinary costs to the defendant (incurring attorneys fees to defend the suit and notifying the entire class of it as well as the cost for settling it). Thus a class action lawsuit seems to me the way to go to put maximum pressure on PayPal. What's the underlying reason for perhaps filing a class action lawsuit against PayPal? In this case, PayPal is withholding the balance of the payment for several weeks. During this time, PayPal can earn interest on the monies they withhold until disbursement to the PayPal account holder. This interest that is being earned can be a significant cash cow for PayPal because they can aggregate all the monies from thousands of its account holders which they are withholding for several weeks while earning interest. It may be a minor sum to most small businesses PayPal account holders. But do that enough times and it becomes a major source of income for PayPal. The issue then, is who does the interest belong to? It's the PayPal account holder's money that PayPal is using during this holding period. That means PayPal should pay this interest to the PayPal account holder because the funds they are temporarily withholding do not belong to them. If they keep the interest earned on the the PayPal account holder's temporarily withheld funds then they are essentially misappropriating it. That strikes me as fraud and conversion of private property. I'm going to close my PayPal account after the funds withheld are released. It's not worth it to file a class action lawsuit against PayPal but they deserve it. I leave it up to someone else to lead the charge. But I'm fairly confident there are plenty of law firms that specialize in class action lawsuits and which would love to file such a claim because PayPal has deep pockets. Try Googling it on the Internet to find them.
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