PayPal Hit by a Consumer Fraud Class Action Lawsuit

A new consumer fraud class action lawsuit hits PayPal. It alleges that the company’s charitable arm takes money from donors for different causes but fails to make the donations. Friends for Health, a nonprofit organization that supports the North Shore Health Center in Highland Park, Illinois has filed the lawsuit. It is one of the 10 charities that Terry Kass, the plaintiff, tried to donate.

According to the lawsuit, the charities never received the money. Allegedly, the PayPal Giving Fund took control of the funds and gave them to those organizations which it liked. And according to the suit, Paypal did this because the charities selected by Kass had not set up the requisite PayPal accounts.

In other words, the consumer fraud class action claims that while PayPal Giving Fund is a great endeavor, it does not meet its mission in many respects. It also states that PayPal Giving Fund is listing charities on its website that are not registered to receive donations. However, it should have informed both the charities and the donors that in order to receive money, the charities should be registered first. Also, allegedly, PayPal Giving Fund not only failed to notify the two parties about this, but also it has been redirecting the funds to organizations of its choosing.

The complaint states that while many larger charities have established such accounts, hundreds of thousands of the smaller ones have not. Note that PayPal Giving Fund platform appeared in 2013. It is there to make it easier for PayPal customers to donate money to the charities they want.

In fact, if the charities don’t establish accounts and do not claim the donations within six months, PayPal doesn’t notify the donor that it is going to redirect the funds somewhere else. Actually, they act as they wish to, without taking into account the customer’s donation intentions.

The plaintiff seeks an order according to which PayPal will have to provide a full accounting of all transactions connecting with the charitable deposits. Also, the plaintiff requires that all the redirected donations go back to the rightful charities. And, of course, the plaintiff seeks to collect statutory and punitive damages as well as attorney’s fees.

What about legal help?

Jay Edelson, Benjamin H. Richman, Christopher L. Dore and Ari J. Scharg of Edelson PC and Michael H. Moirano and Claire G. Kenny of Moirano Gorman Kenny LLC represent the plaintiff. If you think that someone has violated your consumer rights, hire a good attorney.

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