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What is PayPal?

PayPal is a payment system most commonly used on eBay and allows a consumer to protect their financial information.  In a way, the payment system acts as an intermediary between the consumer and their bank accounts. 

For example, if you want to buy something off of eBay, you have the option to click one button and access funds in your account.  The funds are moved from your account to the seller’s account once you buy the product on eBay. 

The same applies when you sell a product on eBay.  Funds are transferred to your account, and these funds are subject to a 2.9% transaction fee plus $0.30 per transaction (sales within the United States).  These funds are collected by the payment service, and the seller can then transfer funds to their bank accounts. 

Is PayPal Involved in Any Lawsuits?

Yes, the payment service has been involved in several lawsuits over the years, and it is currently involved in two large lawsuits.  PayPal is the plaintiff in one case against Google, and the payment service is the defendant in another class action lawsuit.  These lawsuits are explained below:

Lawsuit Against Google

In May of 2011, PayPal filed a lawsuit against Google in a California state court alleging that Google stole trade secrets from its payment system for mobile devices.  The company also alleges that Google hired an important executive away to thwart the company’s mobile payments campaign. 

The complaint was filed in the Santa Clara County Superior Court and claims that Osama Bedier was hired away and released trade secrets to Google.  The complaint states, “[Bedier] is now leading Google’s efforts to bring point of sale technologies and services to retailers on its behalf.”  The complaint also alleges that another former executive for the company, Stephanie Tilenius, is now the Google Vice President of Electronic Commerce and violated contract agreements after she recruited Bedier. 

Class Action Lawsuit

The company was slapped with a hue class action lawsuit in 2011 after it was accused of holding funds for 180 days from consumers who were eligible to collect wages or payments from the payment system.  The company is also accused of keeping all interest that was accrued during the holding period. 

PayPal has more than 81 million accounts in numerous countries.  They informed consumers that the holds were being placed in an email that failed to inform consumers why the funds were held in the first place. 

Case CV10-2046 charges the company with the following counts:

Court One: Violating the California Unfair Business Practices Act and California Consumers Legal Remedies Act

Count Two: Conversion

Count Three: Breach of contract

Count Four: Violating the Implied Covenant of Good Faith and Fair Dealing

Count Five: Brach of fiduciary duty

Count Six: Violating the Electronic Funds Transfer Act under 15 U.S.C. 1693 et seq.

Count Seven: Unjust enrichment

Count Eight: Violations under 18 U.S.C. 2201