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PayPal User Agreement allows $2,500 FINE for Violating their AUP
 

I havent looked at the PayPal user agreement for ages, but last night was prompted to do so.While looking at it, I noticed something that is in there that I never saw before:

10.8 Acceptable Use Policy Violation - User Fines. If you violate the Acceptable Use Policy then we may hold your funds up to 180 Days, fine you up to $2,500.00 USD for each such violation and/or take legal action against you to recover additional losses we incur. You acknowledge and agree that a fine up to $2,500.00 USD is presently a reasonable minimum estimate of PayPal's damages, considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated and the anticipation that proof of actual damages may be impractical or extremely difficult. PayPal may deduct such fines directly from any existing Balance in the offending Account, or any other PayPal Account you control.

Does anyone know when this was added? Sometimes EVERYTHING seems like a potential violation of their Acceptable Use Policy. This language is DANGEROUS, as if they decide to enforce it, they will just keep any money in your account and may even drain your bank account to pay their "fine". They know that the only way for someone to get their money back would be by taking them to court. And for $2,500 it might be difficult to get an attorney to do it. Sure, you could file yourself in small claims court, but how could an individual win against PayPal's attorneys?

Has anyone experienced this? Has it ever been enforced? It's scary, because we all know that PayPal/eBay like to act on mere accusations, not actual proof.

I haven't heard of anyone being hit with this yet, but apparently it's been around for awhile.

Came into force policy change November 2009 (or thereabouts). I'd have to check my back-up file later.

And yes, paypal have applied this, in their usual roundabout way, against users. Been mentioned on the forum. However paypal do not elaborate on the fine but keep the funds.:fight: Their grounds are complex and not for open discussion

I know they tend to have free range to do as they please, but is this even legal? I know little about the law, but can a private company fine its customers? One would think not in reality. But there it is in their agreement....

If they have access to your money, then YES they can get away with it. At least until someone sues them.

Back when eBay first started, I used Ameritech as my ISP. At the time, PayPal did not exist and most individuals could not accept credit cards, so it was mostly checks and money orders.

One day I had 3 dutch auctions end, and I had just over 200 winners. So, I sent the winning bid notices via email.

Ameritech charged my credit card for $1,000. I called to ask them why, and they told me it was in their user agreement that sendig SPAM was against their rules and violators would be fined $1,000. I pointed out that these were auction winners, and not unsolicited commercial emails.

Their response was that it made no difference, since their definition of SPAM was sending more than 150 emails in any 24 hour period that contained substantially the same text.

Of course it was the same text! Who would write INDIVIDUAL emails in this situation? It took me three months to get my money back. They only relented after an attorney called them and pointed out that legally, these people had an existing business relationship with me and that she couldn't think of any judge who would rule in their favor.

Even then, Ameritech wouldn't admit they were wrong. The morons actually sent me a letter warning me not to do the same thing again in the future - even though I closed my account with them weeks earlier.

I can't imagine that ANY reasonable person who looked at the facts would think I was sending SPAM. But some idiot at Ameritech decided to apply the letter of their agreement to me, even though the result was absurd.

What scares me is that eBay and PayPal are like this as well. Once the first monkey at eBay makes a decision, the entire company seems to stand by it, no matter how unreasonable the decision is. We all know that using logic and reason to argue with eBay/Paypal is futile.

Just a couple of weeks ago, someone posted that their friend sold a purse on eBay that was real. They buyer claimed it was ⊗⊗⊗⊗ and PayPal decided in his favor even though they had "burned" the purse (yeah, right). So this poor woman is already out $500 AND her purse. So what is the next step... PayPal claiming that selling counterfeits violates their AUP and takes another $2,500 from her?

Rough story jeffweico - I hope you called your credit card company and did a chargeback on Ameritech way back then.

And with regards to that Paypal policy, sadly I have become more and more familiar with Contract Laws and such. A company can basically write whatever junk they want in their user agreement - it doesnt make it right.

Now if they do enforce - hopefully not against any of us - then it will have to go to court - civil. It's scary but yes, a possibility. How do you go to court in a stealth account?

You don't. It's just a risk. Obviously, the solution is to have as little in your account as possible. Also as little as possible in bank accounts linked to that account.

And you are correct, a company can put any clause, no matter how outlandish, in a contract and enforce it. They can continue the practice until a court rules otherwise. By the time that happens, they could have hauled in millions of dollars. And they don't always have to pay it back. It depends on the circumstances.