An Open Letter to PayPal:

Your Response to Customers’ Claims Defies the Purpose of Consumer Arbitration

Dear PayPal,

Since starting to process arbitration claims against you in March 2020, we’ve received numerous submissions from people who feel that PayPal has injured them and who want some form of justice.

Many of these people have tried to reach out to you through your normal customer service channels without success. Now they’re taking advantage of the only real option left to them – arbitrations.

Now we have seen how PayPal is choosing to respond to customers who feel they have been mistreated.

In a form letter delivered to people who submitted claims, you say that, although PayPal received letters describing their disputes (the official start to the arbitration process), they don’t count. PayPal’s reason? The letters didn’t follow the format that you provide on your website. 

Big companies are used to dealing with customers through customer service, a channel where you can control what customers can and can’t do, and what they do (or more often don’t) get. We’ve seen a lot of companies struggle with how to respond to customers who have discovered that they can access the justice system through consumer arbitration.

But your response is worse than most. Here’s why:

1. The purpose of arbitration, the venue that you’ve forced all of your customers to submit to, is to give you and your customers an efficient and informal process to quickly resolve real disputes. Refusing to acknowledge a dispute because it’s not in the right format does not fit with that spirit of efficiency and simplicity. The system your company has chosen to bind customers to only works if it’s simple and fast, and you are cluttering that up with busywork.
   
2. You imply that, even though you received notices of their disputes, your customers will not be able to file arbitrations with the American Arbitration Association unless they re-submit their disputes on the form that you require. That’s not true – your customers will be able to file their arbitrations. The Federal Arbitration Act allows you to compel your customers’ disputes into arbitration, but there is no statute that allows you to force your customers to fill out arbitrary paperwork before they can seek justice. That’s just not how it works. Telling your customers otherwise is gaslighting them.
   

You’ve already succeeded in preventing your customers from accessing public courts and bringing class actions. That’s the biggest victory of all, and it probably insulates you from billions of dollars of potential litigation.

It’s time to live up to the promise you made to your customers and the courts when you included mandatory arbitration and a class action waiver in PayPal’s fine print. You can start by letting your customers know that you’re no longer hiding behind paperwork, and give individual customers a simple, fair and efficient way to resolve disputes with you.

We hope you’ll rise to the occasion. FairShake is here to help in any way we can.

Sincerely,

Team FairShake