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How To Sue Ebay And Paypal For Unfair Business Practices
By Dr. Michael A. S. Guth, Ph.D., J.D., Mon Jan 2nd
Consumers who have experienced unfair business practices fromeBay and Paypal, e.g., where the companies refuse to live up totheir buyer protection programs, may have recourse in a court oflaw. Typically unsatisfied consumers have bought a product oneBay or pay for it using Paypal only to find that the article isnot as represented, is a different color or size than pictured,or arrives in a broken and unusable condition. When the consumercomplains to eBay and Paypal and asks for a refund, both ofthese eBay-owned companies disavow any responsibility owed tothe consumer. This article will present a guide for consumers to prosecuteeBay and Paypal for deceptive business practices that harmedthem and what they can expect from eBay and Paypal in terms ofdefenses. At the outset, note that eBay and Paypal have managedto insulate themselves from damages claims through creativewording of their user agreements, which all consumers must agreeto accept as a condition for using either eBay or Paypal. Paypal, Inc., is a subsidiary of eBay, Inc., and the twocompanies are intertwined for purchasers of goods sold oneBay.com to complete payments to sellers using Paypal.com. TheDefendants Paypal, Inc. and eBay, Inc., may be served withprocess (summons and a complaint) using the long arm statute ofthe consumer's state. The long arm statute most likely providesfor service of out-of-state corporations through the state'sSecretary of State. eBay's may be served with process at thefollowing address: eBay Inc.; Attn: Corporate Counsel; 2145Hamilton Avenue; San Jose, CA 95125.
Upon receiving the consumer's lawsuit, the defendants eBay andPaypal will advise the consumer that his or her user agreementswith these two firms require the consumer to file disputesagainst the firms either with a court in Santa Clara County, CA,or with the National Arbitration Forum. If the consumer does notvoluntarily withdraw his suit, then eBay will threaten to seekits lawyer fees to have the case dismissed. At this point, mostconsumers then drop their suits. However, the arbitration clauses in the user agreements excludeclaims for equitable or declaratory relief. Accordingly, if theconsumer files his suit from the outset seeking equitable ordeclaratory relief, then the eBay user agreement defense willNOT prevent the lawsuit from going forward. With the lawsuitproceeding forward, the consumer can send eBay or Paypalinterrogatories to seek discovery. Interrogatories are writtenquestions sent to a party to a lawsuit that must be answered inwriting, usually within 30 days. With interrogatories, theconsumer can get access to information about the seller, as wellas the frequency with which consumers have complained aboutitems being delivered that were materially different from theitem pictures on eBay. The consumer's local state court will have personal jurisdictionover the eBay and Paypal to hear claims for equitable anddeclaratory relief, because these firms have
establishedsubstantial contacts the consumer's state. The followingnon-exhaustive list of activities and contacts by the eBay andPaypal in and with the consumer's state make it fair, equitable,and convenient for eBay and Paypal to defend these causes ofaction in the consumer's state: (1) The controversy arose out of the consumer's purchase of someitem on eBay.com, which was shipped to him or her at theconsumer's address, and which arrived damaged and unusable. Thefunds used to pay for this transaction were drawn from a bank inthe consumer's hometown, and payment for this transactionoccurred in the consumer's hometown. The contract to purchasethe item and pay for shipping was most likely formed in theconsumer's hometown. (2) For more than 10 years, eBay and Paypal have systematicallyand continuously advertised their services to the consumer andother Internet users in the consumer's state via advertising andelectronic mail. Over the years, eBay and Paypal have collectedfees on scores of millions of dollars in payments and sellerfees from businesses and residents in the consumer's state. For circumstances in which a seller refuses to take back damagedmerchandise and issue a refund, the consumer can seek equitablerelief to bar that seller from any and all further transactionson the eBay and Paypal platforms. The consumer can seekdeclaratory relief that eBay and Paypal's Buyer Protection Plansubmission forms are riddled with computer errors and will notallow users to properly submit claims. The consumer should also seek declaratory relief that eBay andPaypal's fraud violated the state Consumer Protection Act, whichthus gives the consumer a statutory right to prosecute eBay andPaypal independent of any breach of contract claim he or she mayhave related to the user agreement. The consumer can also challenge in his local state court thevalidity of the arbitration clause as unconscionable. A claimthat the arbitration provision is unconscionable is a matter tobe decided by the courts and not the arbitrator, because itspecifically challenges the validity of the agreement toarbitrate irrespective of the validity of the whole contract. Ifthe state trial court determines that the arbitration clause isunconscionable, then the consumer will be entitled to pursuemonetary damages against eBay and Paypal. However, it isunlikely that a state court will find the arbitration clausesunconscionable, due to the pro-business tilt of the U.S. courtsystem. For more information and free legal advice for cases againsteBay and Paypal, please contact the author through web pagehttp://michaelguth.com/prose.htm About the author:Dr. Michael A. S. Guth, Ph.D., J.D., is an attorney at law basedin Oak Ridge, Tennessee. His practice focuses on enabling peopleto represent themselves pro se without a lawyer (and therebysave on legal fees), as well as full representation forappellate practice. One area his work has particularlyemphasized is child support defense and elimination of theunconstitutional debtor prisons that now saturate our courtjurisdictions across
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