How to Sue PayPal

Looking to sue PayPal? Small claims court is an option, and you may have others…

So you want to sue PayPal?

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Maybe you’ve tried all the PayPal customer service options. Maybe you’ve even tried other ways to bring your PayPal complaint.

But some people say it’s hard to get a refund from PayPal. And while you might think you have the right to a class action lawsuit against PayPal, it’s actually more complicated.

A lot of companies like PayPal add what’s called an arbitration clause to their contracts. It gives them the right to force legal claims out of state or federal courts. But you still have rights to sue under your PayPal contract.

Here’s what you can do…

Two ways to Sue PayPal

The first way to sue PayPal is through consumer arbitration. If your contract has an arbitration clause it gives you the right take legal action against PayPal through an officially-designated, independent dispute process that’s not a court and won’t require showing up in person. This can be a better option for a lot of regular people.

The second way to sue PayPal, if you want to avoid the arbitration system, is to use Small Claims Court. While their contract may keep lawsuits out of state and federal courts, they can’t stop you from pursuing the small claims process. If you’re ready to sue PayPal on your own, read on below:

Taking PayPal to Small Claims Court Step-by-Step


Make sure your PayPal claim qualifies for small claims court

Do you have a strong enough case to sue PayPal in small claims court? Small claims courts are only for certain types of claims. This means you should understand the criteria you have to meet for filing a claim in a small claims court.

Small claims court can be time consuming. We’ll help you try arbitration instead.

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There are two criteria especially worth noting:

Amount of Money

Each state has set a limit on how much a plaintiff can seek in monetary damages during a small claim court hearing. The highest amount allowed by some states is $10,000, while the lowest maximum amount allowed in other states is $2,500. You can find the limit placed on monetary damages in small claims court cases here.

Type of Relief

You can seek two types of awards in a small claims court: Monetary and no-monetary. Although most favorable decisions grant monetary awards, the judge presiding over your case against PayPal might decide to place one or more restrictions on how the company conducts business.  The presiding judge can also submit a formal decision that prohibits PayPal from engaging in the same type of business practices that motivated you to file a lawsuit in small claims court.

If the amount of money that you seek exceeds the state-mandated maximum amount allowed, then you must take your case to binding arbitration. FairShake works under the guidelines established by the American Arbitration Association. In addition, a company representative can help you navigate the binding arbitration process.

Ready to start your claim against PayPal? The expert team at FairShake can help. Start your claim for free.


Send a demand letter

Many of complaints filed against PayPal in small claims court concern poor customer service. Regardless of the issue(s) you have with the card processing company, most small claims courts require that you ask the company you’re suing (the “defendant”) to fix your problem voluntarily before you file a claim.

PayPal offers a dispute resolution page on its website. If PayPal does not agree with your point of view, then it might be time to start the small claims process by sending a demand letter.


Writing a Demand Letter

Writing a demand letter should be a simple process. You should use clear language in a few short sentences that gives your contact information (name, address, phone number, and account number), as well as describes the issue you have with PayPal. FairShake recommends sending a certified demand letter that confirms you sent the letter and that PayPal received the demand letter.

According to our most recent research, PayPal is legally based in Delaware and receives mail at this address:



Fill out court forms

Make sure to fill out enough copies of your court filesEach state has a set of forms that you need to submit before any legal action is taken against PayPal. Therefore, to learn what forms your state requires to start a small claims court case against PayPal, visit your state’s judicial website. Every state offers small claims court forms at no cost to plaintiffs.

You can file small claims court paperwork by mail or in person. Make sure you submit the correct number of forms to ensure timely processing. In addition to state forms, some counties also require plaintiffs in small claims cases to file additional documents.

When you file your forms, the court clerk will provide you with a stamped copy of the forms and a court date. Keep it safe and bring it with you on the day of your hearing.


Serve your claim against PayPalFollow the rules carefully

Suing PayPal in small claims court can take a considerable amount of time. However, you have completed the preliminary work by sending the company a demand letter and submitting the forms required by your state.

Now, the time has arrived to inform PayPal about the small claims filing. Legally referred to as “serving” PayPal, you must send the company the legal documents explaining everything associated with your small claims lawsuit.

Your state’s judicial website should provide instructions about how to serve formal small claims court papers. Most courts have developed strict rules concerning how to serve lawsuit documents. To avoid having your claim denied outright by a judge, make sure you follow every paperwork serving guidelines established by your state.


Show up to court

Bring your stamped forms and other evidence to courtWhen the court clerk gives you a court date, make sure to put it on your calendar. Prepare for the first day of court by knowing which courthouse is holding the hearings, as well as bring the evidence you need to support your claim against PayPal. A representative from PayPal might show up to the first hearing. If that happens, take advantage of the representative’s absence by presenting your side of the story.


Communicate with your legal representative

Showing up for your court date does not end your commitment to ensuring you receive justice from PayPal. You need to stay on touch with your legal representative by speaking on the phone and/or exchanging text and email messages.

Some small claims court cases end after just one hearing, while other cases last for weeks.

Ready to submit a claim against PayPal? Let our expert team help. Start your claim for free below.

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