I had a conversation with lead attorney AJ DeBartolomeo regarding the PayPal mailing. PayPal did indeed do the mailing at PayPal’s request for what PayPal claimed were “security reasons.” In fact, it was argued that because there were so many scams out there that this would prevent people thinking the lawsuit was a hoax. PayPal assured the lawyers that that everyone within the company would be notified of the mailing so that when a customer asked asbout the legitimacy of the mailing they would be told the right thing. AJ is a little concerned that PayPal is now telling some customers (my example is not isolated) that the letter is a hoax. It’s not a hoax.

After she told me that PayPal fought tooth-and-nail for two years regarding this suit, you have to wonder why the company would insist on doing the mailing in the first place. It’s not normal to get this sort of notice from the defendant.

The suit stems from PayPal’s cavalier attitude towards its customers in violation of various California State laws regarding companies engaged in wire transfer activity. This includes freezing accounts without proper procedures and allowing funds to be transferred willy-nilly from account to account without customer recourse. I’ve heard a lot of complaints about PayPal over the years and the company, owned by EBAY, should be ashamed of itself. An entire website of complainers exists at Paypalsucks.com. PayPal claimed that it was not a financial institution and not bound by the applicable wire transfer laws. Whether that was true or not, how is this any way to treat customers?

Unfortunately one of the gotchas in this suit is that the damages cap is $500,000 total. Although DeBartolomeo says that individuals can recoup their individual losses and their expenses (faulty overdraft charges, etc.)

During the conversation the issue of eBays general procedures for dealing with customer fraud has come up with various users that she and the other partners have talked to. eBay tends to be less than aggressive when it comes to criminals and con-men who frequent their service to cheat customers. I have heard from personal friends who got no satisfaction in dealing with the company. DeBartolomeo says the law firm would be very interested in hearing from people with these sorts of complaints. Go to the website at http://www.girardgibbs.com/ and tell them your tale.

The long term implications of eBays customer service policies will probably lead people away from the company. Already two alternative payment systems are available:



  1. There is also http://www.money.com which is actually a site dedicated to news, which is where you find the money if you are lucky.

    If I’m involved in any lawsuit, I want a certified letter delivered by a USPS employee wearing credentials and driving a red, white and blue truck. I know it costs money, but I’m not playing these games with high tech crooks or people with class action cash generation ideas and a collection of vague web sites that need investigated. Use the mail and use it right. Is it that difficult?

    Certified mail service provides the sender with a mailing receipt and, upon request, electronic verification that an article was delivered or that a delivery attempt was made. Customers can retrieve the delivery status in three ways: (1) over the Internet at http://www.usps.com by entering the article number shown on the mailing receipt; (2) by telephone at 1-800-222-1811; or (3) by bulk electronic file transfer for mailers who provide an electronic manifest to the Postal Service. A delivery record (which includes the signature) is retained by the Postal Service for a specified period of time. Certified mail is dispatched and handled in transit as ordinary mail. Delivery of certified mail is subject to D042. No insurance coverage is provided.

    For more about USPS certified mail see
    http://www.usclonline.com/ or http://usclonline.com/automated/

  2. Tenaya says:

    First, vistiting the paypalsucks site reveals that PayPal can lock up an account for 180 days for any reason. They can also refuse to detail why they did so and they provide no appeal process.

    Now, let’s combine that with the fact that when you, as a PayPal user, apply to be part of the settlement, PayPal knows (afterall, they are graciously doing the emailing).

    What keeps PayPal from freezing the accounts of all who apply to join the settlement?

    Sound paranoid? Maybe, but who would have expected PayPal to treat their customers this way?

  3. K B says:

    PayPal is one of those services which should have been the greatest thing since sliced bread. Instead, it has become just another of those modern annoyances which are probably best left alone.

    If you must use it, I suggest at least doing what I do, which is to provide one of those special credit card numbers which (1) is valid only up to the limit you specify; (2) is valid only for that single merchant (PayPal), and (3) expires within a period you specify.

    It’s probably also good to use what I call the hang-gliding rule: Never fly higher than you are willing to fall. In other words, just use it for the small ticket stuff, and keep that credit card limit LOW.

    As far as using it for *selling*– that’s scarier. (Bank account info required….)

    There’s probably competition on the way. I’ve seen eBay sellers offering auctioncheckout.com as an alternative. I looked at it briefly. It appears that the seller must pay a monthly fee for buyers to use it, but if PayPal continues its consumer-unfriendly ways, I think that interest in alternatives will continue to rise.

    Ah! My first blog post. It’s like losing one’s virginity, isn’t it?

  4. It’Coulter’s like losing one’s virginity? I’d venture sanity. Blogs are DOS Attacks on productivity.

  5. William C. Logan says:

    Dear Mr. Dvorak,

    Even though this may not be the appropriate forum to express an opinion on your fine article, I thoroughly enjoyed your expose on “The Myth of Disruptive Technology.” I found only one point of disagreement. You will never get me to concede that “asphalt was never cheaper than or inferior to dirt.” I am originally from Northern Ohio.

    Respectfully yours,
    Bill Logan

  6. Philip says:

    Ironic that yowcow sponsors paypalsucks.com and authors some of its content.

    Do some research:


  7. John C. Dvorak says:

    ha… yowcow is a friend of the site I’m certain. I sure would be. So? If you think they are behind the site you should think again or do some research yourself. The site was started by a personal friend of mine and not because of anything Yowcow ever did. He has a personal grudge with Paypal. It’s a pure grudge site.

  8. Harry says:

    The trouble when mentioning yowcow and paypalsucks.com is that yowcow sponsors the site so everything is biased towards yowcow. I have seen post be deleted that critised yowcow. Stories of people who had their accounts frozen by yowcow are either deleted or yowcow spammers attack them saying they are liars or fraudsters. Its a nasty business and paypalsucks.com and yowcow seem to be up to some sort of shady activity themselves. So beware both yowcow and paypalsucks if you want a balanced view on processors.

  9. Harry says:



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