Paypal Modifies Terms of Service - Users Legal Rights Severely Restricted

Perennial contender for Worst Company in America - PayPal - has quietly (I didn't use the word sneaky) changed their terms of service in the event of a dispute. Binding arbitration is required, and the new agreement goes on to specifically ban users from joining in any class action litigation.

Arbitration may be a useful and appropriate way to resolve a dispute, but I don't like restrictions being placed on my right to litigate.

Direct from the updated Paypal TOS agreement:

Prohibition of Class and Representative Actions and Non-Individualized Relief.

YOU AND PAYPAL AGREE THAT EACH OF US MAY BRING CLAIMS AGAINST THE OTHER ONLY ON AN INDIVIDUAL BASIS AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE ACTION OR PROCEEDING. UNLESS BOTH YOU AND PAYPAL AGREE OTHERWISE, THE ARBITRATOR MAY NOT CONSOLIDATE OR JOIN MORE THAN ONE PERSON’S OR PARTY’S CLAIMS AND MAY NOT OTHERWISE PRESIDE OVER ANY FORM OF A CONSOLIDATED, REPRESENTATIVE, OR CLASS PROCEEDING. ALSO, THE ARBITRATOR MAY AWARD RELIEF (INCLUDING MONETARY, INJUNCTIVE, AND DECLARATORY RELIEF) ONLY IN FAVOR OF THE INDIVIDUAL PARTY SEEKING RELIEF AND ONLY TO THE EXTENT NECESSARY TO PROVIDE RELIEF NECESSITATED BY THAT PARTY’S INDIVIDUAL CLAIM(S). ANY RELIEF AWARDED CANNOT AFFECT OTHER PAYPAL USERS.

There is a way to opt out of this agreement change. Notify Paypal in writing (snail mail) of your desire to be excluded from the change. Your written request must be postmarked by December 1, 2012.

Reports are that some requests have been rejected because they are "not formatted correctly."

The Consumerist has provided a template that is properly formatted and in appropriate legalese. You may download that template here.

E-Bay, the parent company of PayPal has instituted a similar change to its user agreement. Again you have a limited time to submit a written "opt out" letter. Their deadline is November 9, 2012.

A template for EBay, also courtesy of The Consumerist, is available here.

I will be honest - I don't know what may happen if you choose to opt out. Will they find reason at some future date to cancel your account? Don't know. I guess it is a possibility. So, I am not recommending a course of action. I would like to hear what others think before I mail my forms.

A blog that I follow shared this info with me and I am sharing with you. Whatever choice you make, at least you are informed. I don't know if this is international or U.S. specific.

Those postmark deadlines again:

EBay - November 9, 2012

PayPal - December 1, 2012

Download EBay Template

Download PayPal Template