Firm Wants to Distance Anti-PayPal Sites From Lawsuit

Jacoby & Meyers is looking to stop Web site operators from suggesting any affiliation with a class action suit the law firm filed against payment processor PayPal Inc. this month.

The New York law firm has not asked for an emergency order from the California Superior Court directing Web sites to do so, however, as had been incorrectly stated in a recent Jacoby & Meyers press release.

“We're evaluating and looking at the best route to take,” said the firm's founding partner Gail Koff. “We are putting something together.”

Internet chat rooms and message boards have been “buzzing for days” about the suit, Jacoby & Meyers said, and a growing number of consumer Web sites critical of PayPal have appeared. At least one anti-PayPal Web site suggests that consumers “direct all class action questions here,” and another is charging for information about the suit, the law firm said.

Koff declined to name any specific Web sites, or whether Jacoby & Meyers has contacted any of its operators.

“We're doing what we think is most appropriate,” she said. “I don't want to comment too much until we're acting in a comprehensive fashion.”

The suit alleges improper restriction and administration of customer accounts by PayPal. Jacoby & Meyers claims to have fielded thousands of complaints concerning PayPal and this week was still fielding “hundreds” per day, Koff said.

Among the sites that are taking shots at PayPal are and, which can also be accessed through Many of the complaints are over an alleged inability to contact PayPal customer service representatives. The PayPal site offers e-mail forms to get in contact with the various departments, but telephone numbers are not immediately apparent.

“If you're even thinking of signing up with these guys, think again. Really,” reads one page dedicated to bashing PayPal on “You must ask yourself one question, if this was a legitimate business then why is it so hard to contact these people?” Graphics on the page compare PayPal to Nazis, Fidel Castro and the infamous photograph of a federal agent seizing Elian Gonzalez at gunpoint.

PayPal executives have been in a post-IPO quiet period.

Meanwhile, eBay has apparently had enough of PayPal making money off transactions among eBay's members.

eBay recently announced it is repurchasing a 35 percent equity stake in online payment service Billpoint from Wells Fargo for $43.5 million. eBay claims that 25 percent of its listings offer Billpoint as a transaction processing option.

PayPal has no formal relationship with eBay, and is considered a competitor. PayPal's reliance on eBay has been repeatedly cited as a liability.

PayPal, Palo Alto, CA, opened on the Nasdaq market on Feb. 15, at $13 and shot up to $22.44, giving it a market cap of $1 billion. Shares fairly quickly fell into the range of $14 to $16 and have hovered there since. PayPal raised $70 million with its IPO. It has 13 million members and counting.

PayPal lost $107.8 million last year on revenue of $105 million and has warned that it may not reach profitability.

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