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Frequently Asked Questions






What is this lawsuit about?

In March 2005, the Plaintiffs filed this lawsuit in New York state court on behalf of themselves and the Class. The lawsuit alleges claims against PayPal and eBay arising out of representations contained in certain provisions of the PayPal User Agreement regarding PayPal’s policies and practices for responding to refund requests (or “Buyer Complaints”) from those customers who pay for transactions through PayPal using funds from sources other than a credit card. In particular, the lawsuit alleges that PayPal’s policies and practices constitute deceptive trade practices, fraudulent inducement and misrepresentations, and breach of the PayPal User Agreement. The lawsuit also alleges claims against Essex, a company that sold goods through eBay, arising out of alleged misrepresentations about Essex’s goods and services.

In April 2005, this lawsuit was removed to federal court, where it is currently pending in the United States District Court for the Eastern District of New York. Senior United States District Court Judge I. Leo Glasser is in charge of this action.

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Why is there a settlement?

PayPal and eBay do not believe that they did anything wrong. In fact, PayPal and eBay deny any and all liability for the claims alleged in the lawsuit. The Court has not decided in favor of the Class or PayPal and eBay, and by giving Notice, the Court is not expressing any view on the merits of the lawsuit.

Instead, the parties engaged in a series of settlement negotiation sessions mediated by retired United States District Court Judge Nicholas H. Politan and United States Magistrate Judge Viktor Pohoreslky. Eventually, both sides agreed to a settlement in principle. By settling their claims, both sides avoid the uncertainty and cost of a trial or appeal, and eligible members of the Class will receive money and other benefits. The Representative Plaintiffs and PayPal and eBay believe that the Settlement is fair and in the best interest of all members of the Class.

The Settlement does not resolve the claims against Essex. On April 28, 2008, the parties entered into a formal Settlement Agreement, which is on file with the Court and available on this website.

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How do I know if I am part of the Settlement?

On July 24, 2008, Judge Glasser entered an order granting preliminary approval of the Settlement and certifying the following “Class” for purposes of the Settlement: all U.S. based PayPal account holders who funded a PayPal transaction after February 1, 2004, using a source other than a credit card: (i) who subsequently requested a reversal of the transaction through PayPal’s prevailing Buyer Complaint Policy and/or Buyer Protection Policy (collectively, “Policies”); (ii) who did not receive a refund equal to 100% of their transaction payment in response to such request from PayPal or their bank; and (iii) who, through the timely submission of a Claim Form under oath, attest to a reasonable and good faith belief that they would have received a full reversal of such payment had they used a valid credit card in their possession at the time of the subject transaction to fund the payment and filed a timely chargeback request with their credit card issuing bank.

On April 30, 2009, Judge Glasser entered an order granting final approval and modified the class definition. The class as modified includes: All U.S. based PayPal account holders who funded a PayPal transaction after February 1, 2004, using a source other than a credit card: (i) who subsequently requested a reversal of the transaction through PayPal's prevailing Buyer Complaint Policy and/or Buyer Protection Policy (collectively, "Policies"); and (ii) who did not receive a refund equal to 100% of their transaction payment in response to such request from PayPal or their bank.

Excluded from the Class are any judicial officer to whom this Litigation is assigned; PayPal, eBay and any of their affiliates; any current or former employees, officers, or directors of PayPal or eBay; any persons currently residing outside of the United States; and all Persons who timely and validly requested exclusion from the Class pursuant to the Long-Form Notice.

If you funded a PayPal transaction using a source other than a credit card during the period February 1, 2004 through the present, and are not one of the excluded persons listed above, you are a member of the Class, also called a “Class Member.”

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Who are the lawyers representing the Class in this case?

To represent the Class, the Court has appointed Vincent Farinella, George Cesar, Douglas Mashkow, and Daniel Schoppe as Representative Plaintiffs, and their counsel of record, Marina Trubitsky & Associates, PLLC, as Class Counsel. If you want to be represented in this lawsuit by your own attorney, you may hire one at your own expense, and you may appear in this litigation through your own attorney.

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What does the Settlement provide?

A.   Monetary Relief

Under the Amended Settlement, PayPal paid a total of three million five hundred thousand dollars ($3,500,000) into an interest-bearing account. The original deposit of $3,500,000, plus accrued interest, constitutes the “Settlement Fund.” The Settlement Fund will be used: (i) to make payments to Class Members who submitted valid claims before the deadline; (ii) to pay certain costs of administering the Settlement, as approved by the Court; and (iii) to pay attorneys’ fees and expenses to Class Counsel in the amount awarded by the Court. After the deduction of administrative costs and Class Counsel’s attorneys’ fees and expenses, the balance of the Settlement Fund (the “Net Settlement Fund”) will be applied in accordance with the “Plan of Allocation,” attached as Exhibit F to the Amended Settlement Agreement.

In brief, the Plan of Allocation requires, among other things, that the Net Settlement Fund be distributed to Class Members who funded a PayPal transaction since February 1, 2004, using a source other than a credit card: (i) who subsequently requested a reversal of the transaction through PayPal’s prevailing Buyer Complaint Policy and/or Buyer Protection Policy (collectively, “Policies”); (ii) who did not receive a refund equal to 100% of their transaction payment in response to such request from PayPal or their bank; and (iii) who, through the timely submission of a Claim Form under oath, attest to a reasonable and good faith belief that they would have received a full reversal of such payment had they used a valid credit card in their possession at the time of the subject transaction to fund the payment and filed a timely chargeback request with their credit card issuing bank. Persons who meet all of these requirements are “Class Members.”

All claims submitted by Class Members were reviewed by a Settlement Administrator appointed by the Court to determine if they were submitted on time and are otherwise valid and non-fraudulent. The Settlement Administrator will also have access to PayPal records, in order to verify the contents of the Claim Forms.

Thereafter, each Class Member will receive a percentage of his or her validated claim(s) equal to the total amount of the Net Settlement Fund divided by the total monetary value of all validated claims. Thus (by way of example only), if the Settlement Administrator determined there to be $5 million in validated claims and there were $1.5 million in the Net Settlement Fund, each Eligible Class Member would receive a payment equal to 30 percent ($1.5 million divided by $5 million) of his or her validated claim(s).

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How do I make a claim and receive a payment?

You must have submitted a Claim Form no later than the December 14, 2008 postmark deadline.

If the Settlement Administrator determined that you are entitled to a payment under the Plan of Allocation, you were mailed a Settlement check on June 3, 2011.

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What am I giving up if I participate in the Settlement?

On April 30, 2009, the Court granted final approval of the Amended Settlement and entered a judgment dismissing all claims against PayPal and eBay in the lawsuit with prejudice, and releasing any and all claims for payment of any kind and, any and all liabilities, demands, obligations, losses, actions, causes of action, damages, costs, expenses, attorneys’ fees and, any and all other claims of any nature whatsoever, arising from or relating to any of the allegations or statements made in, or in connection with, the litigation (and including, without limitation, any and all claims based upon any of the laws, regulations, statutes, or rules cited, evidenced and referenced by all such allegations and statements), or any State Attorney General’s report or investigation involving the same or substantially similar matters regarding PayPal’s alleged failure to fully reimburse Class Members during the Class Period.

As a result, if you are a Class Member and did not exclude yourself from the Class, you will be barred from bringing any of the claims described above against PayPal and eBay that arose prior to the date of the Email Notice. This means that you will not be able to sue, continue to sue, or be part of another lawsuit against PayPal, eBay or their affiliates, relating to the legal issues in this case. You will be bound by all proceedings, orders, and judgments entered in connection with the Settlement, whether favorable or unfavorable. You will be represented by the Representative Plaintiffs and Class Counsel for purposes of the Settlement, unless you choose to hire your own lawyer at your own expense to represent you in this case.

In short, if you did not exclude yourself from the Class, your claims against PayPal, eBay, and their affiliates will be forever released as described above.

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What if I wanted to exclude myself (opt-out) from the Settlement?

Your original, signed request for exclusion must have been RECEIVED on or before October 31, 2008.

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If I excluded myself, can I still get money from the Settlement?

No. If you excluded yourself from the Class, you will not be able to participate in the Amended Settlement and will not receive any payment from the Amended Settlement. Any claims that you may have against PayPal, eBay and their affiliates will not be released.

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How were the lawyers in this case paid?

From the inception of the litigation in March 2005 to the date of Final Approval of the Settlement, Class Counsel have not received any payment for their services in bringing or prosecuting this case. Nor have they been reimbursed for any out-of-pocket expenses.

Since the Court approved the Amended Settlement, Class Counsel was paid from the Settlement Fund as defined in the Memorandum and Order, and Class Counsel exercised their right to make additional applications for fees and expenses incurred relating to the Settlement. The Fee Application was heard at the Settlement hearing.

Class Counsel’s Fee Application was based on various factors, including the time and effort already invested in the prosecution of the Litigation, the benefits obtained for the Class by bringing this lawsuit, as specified herein and in the Amended Settlement Agreement, as well as the time and effort that was required of Class Counsel prior to final approval of this Amended Settlement. PayPal took no position on the application for attorneys’ fees, costs and expenses.

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Can I comment in support of or in opposition to the Settlement?

Your original, signed comments must have been filed with the Court no later than October 31, 2008.

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What is the difference between objecting and excluding?

Objecting is simply telling the Court that you do not like the Settlement or any aspect of the Settlement. You could have objected only if you are a member of, and did not exclude yourself from, the Settlement Class. Even if you objected to the Amended Settlement, you could have submitted a Claim Form and obtained payment under the Settlement if you are an Eligible Class Member.

Excluding yourself, or opting-out, from the Class is telling the Court that you do not want to be part of the Class or participate in the Settlement. If you excluded yourself from the Class, then you could not have filed a Claim Form, you will not receive any payment under the Amended Settlement, and you could not have objected to the Amended Settlement.

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When and where will the Court hold a hearing on the Settlement?

IMPORTANT UPDATE: PLEASE BE ADVISED, THE COURT GRANTED FINAL APPROVAL OF THE SETTLEMENT ON APRIL 30, 2009.

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What happens if I do nothing at all?

If you did nothing, you will be deemed to have accepted the Settlement and any decisions of the Court with respect to the Settlement and the lawsuit. However, you will not receive any payment unless you meet all of the requirements to be a Class Member and timely submitted a valid Claim Form.

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Are there more details about the Settlement?

This website contains only a summary of certain provisions in the Settlement. The full terms and provisions of the Amended Settlement are contained in the Amended Settlement Agreement. The Clerk of the Court, located at 225 Cadman Plaza East, Brooklyn, New York 11201, maintains files containing the Amended Settlement Agreement and all other documents filed in the lawsuit. Copies of these documents are available for inspection and copying during the Court’s normal business hours.

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How do I get more information about the Settlement?

You can get more information by sending a letter to the Settlement Administrator or Class Counsel at the following addresses:

PayPal/Steele Class Action Settlement
c/o The Garden City Group, Inc.
P.O. Box 9309
Dublin, OH 43017-4209
Marina Trubitsky & Associates, PLLC
attn: Marina Trubitsky
c/o PayPal/Steele Class Action Settlement
11 Broadway, Suite 861
New York, NY 10004

While PayPal employees are available to give you information about your PayPal account, they cannot give you legal advice, and they will not be able to answer questions about the lawsuit or the Settlement.

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