Los Angeles: On February 10, 2022, The Ramji Law Group filed a lawsuit against PayPal in the Los Angeles Superior Court, Case No. 22STCV05187, on behalf of Gary Nezri alleging, among other causes of action, conversion, violation of the Electronic Funds Transfer Act, 15 U.S.C. §§ 1693, et seq.; Unfair Business Practices under Cal. Bus. & Prof. Code §§ 17200, et seq., breach of fiduciary duty, and under Civil RICO, 18 U.S.C § 1964(c).

The lawsuit arises out of PayPal’s practice of unlawfully converting/seizing funds held in customers’ accounts by citing to alleged violations of its User Agreement and Acceptable Use Policy (“AUP”). PayPal offers no prior notice before seizing the funds, and gives no specific reason for its actions, or recourse to get the seized funds back.

Here, PayPal informed Nezri on or about May 24, 2021, that: “After a review of his account activity, we’ve determined that you’re in violation of PayPal’s AUP”  “ and as a result, your account has been permanently limited and you won’t be able to conduct any further business using PayPal.” PayPal cited to its User Agreement sections as authority for its actions. This Notice further stated that funds in the account would be held for 180 days. But the funds were never returned.

On or about November 26, 2021, PayPal withdrew Nezri’s funds held in his PayPal account in the amount of 131,564.25 (about $150,000 USD), without any notice, explanation, or recourse as to how he could obtain his funds ? citing to the AUP for its authorization. But the AUP was never presented to Nezri (or other clients) at the time he began using the PayPal account. It was provided for the first time in the initial Notice, via a hyperlink. Indeed, this is PayPal’s established pattern and practice among its clients whereby it places a hold/freezes clients’ accounts for 180 days citing to alleged unspecified violations of the User Agreement, then after the 180 days has lapsed, it withdraws the funds from its clients’ accounts.

Rizwan Ramji, who represents, Nezri stated: “This is a corrupt and unconscionable practice by PayPal to first freeze, and then take for its own use, its customers’ funds without notice, reason, or recourse. It is hard to fathom how any of its customers could trust PayPal to safely and securely hold its funds.”

For the case file, here is the link: https://unicourt.com/case/ca-la23-gary-nezri-vs-paypal-inc-a-delaware-corporation-807848

Tags: violation, conversion, Rizwan Ramji, Gary Nezri, PayPal, Funds, Lawsuit, Illegal, customer accounts, seize, AUP