If you are a frequent user of PayPal, you should know that they recently made a change to the PayPal User Agreement and the update is something you will want to pay attention to. Here is the official language sent out to registered members through a Policy Update email:
“PayPal recently posted a new Policy Update which includes changes to the PayPal User Agreement. 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.“
What This “Agreement to Arbitrate” Policy Update Means
You might be wondering what the language in PayPal’s recent policy update means for you as a user of their service. It’s important to understand what this update is saying because if you agree to it, you will not be gaining anything. Instead, you will be giving up some of your key rights as a consumer.
Let’s go over what the language means piece by piece.
PayPal: “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”
What It Means: If you do not personally tell PayPal that you do not agree with this policy update to their User Agreement, you will be giving up your right to file a claim against them in court. You will only be able to settle claims through arbitration, which is a different legal process that is used sometimes instead of a traditional courtroom lawsuit (see details below). It is very important that you understand here that if you agree to the policy update, you are giving up your right to take PayPal to court for any reason.
PayPal: (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.
What It Means: You can only file claims against PayPal as an individual. Unless you notify PayPal that you do not agree to this policy update, you are giving up your right to participate in any class action lawsuit against PayPal. Again, it is important that you understand what you are forfeiting by agreeing to this new policy.
PayPal: (2) you will only be permitted to seek relief (including monetary, injunctive, and declaratory relief) on an individual basis.
What It Means: By agreeing to this policy update, you will only be allowed to request relief as an individual and not as part of a group or class action lawsuit.
Monetary relief: This term refers to a financial award of some sort such as a refund that you may obtain after posting a complaint on Scambook.
Injunctive relief: This term refers to a legal order that requires an individual to do or not do something specific. An example would be if a court orders an injunction that says a child cannot leave the country in a custody battle.
Declaratory relief: This term refers to a legal order that determines the rights of the involved parties without awarding any monetary damages or ordering that anything specific be done. For example, someone seeking declaratory relief might ask the court to make his or her rights in a contract clearly defined so that there is no confusion afterwards.
What Is Arbitration
Arbitration is a legal process that is sometimes used to handle legal claims and matters between parties. The process uses a neutral party (arbitrator) to make the final decision and settle the matter instead of using a judge or jury. However, an individual can be awarded the same amount of monetary damages that may be granted through a lawsuit in court after the arbitrator hears both sides and makes a decision. It is simply a less formal process, but it still holds the same legal authority.
How To Let PayPal Know You Do Not Agree
Here are the steps you need to take if you wish to opt out of the new User Agreement update and let PayPal know that you do not agree to this policy update:
- Write a letter to PayPal titled “Opt-Out Notice” explicitly stating that you do not agree to the Agreement to Arbitrate.
- Include your name, address, phone number and the email address(es) that you use to log in to your PayPal account(s) that you want to opt out.
- Sign and date the “Opt-Out Notice.”
- Mail the “Opt-Out Notice” to: PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.
- For new users, the signed notice must be postmarked no later than 30 days after you accepted the User Agreement for the first time. If you were already a member before this new Agreement to Arbitrate was posted, you must postmark the “Opt-Out Notice” before December 1, 2012.
Read The User Agreement
As we always encourage you to do so, it never hurts to do your research. You will always want to read something before you sign your name to it and make sure you understand what it will mean once you sign or click “Submit.”
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I wanted to add that anyone can put anything in a user agreement. It does not mean anything. In California a court ruled against paypal and ebay regarding this exact kind of issue. Definitely check out your state laws, but know that any rights you have under law can not be taken away by some user agreement. Even if you do agree.
The law is the final determination despite what Paypal may tell you or try to convince you of.
Big big thanks for useful information 🙂
What happens if you do opt out? Will they take retaliatory action against you like limit or close your PayPal account? Should I fear consequences for opting out?
Based on the language in PayPal’s Policy Update to their User Agreement, it does not appear that you have anything to be concerned about if you choose to opt out. The language states that by opting out, you are rejecting the new terms and it does not state anywhere or suggest anywhere that there will be any negative consequences such as a limited or closed account. In fact, if you read the excerpt below, you will see that PayPal lets you know that all other parts of the User Agreement will continue to apply. If you are still concerned, please contact PayPal directly and ask them if there is anything you need to be worried about. As far as I can tell, your account will still be fully functional and normal. Please see the excerpt I mentioned below:
“If you opt out of the Agreement to Arbitrate, all other parts of the User Agreement, including all other provisions of Section 14 (Disputes with PayPal), will continue to apply. Opting out of this Agreement to Arbitrate has no effect on any previous, other, or future arbitration agreements that you may have with us.”
Read the full Agreement here: https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&fli=true&content_ID=ua/upcoming_policies_full&locale.x=en_US
Hope this answers your question! Thank you for reading!
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