There has been recent activity in the US Ninth Circuit Court of Appeals regarding the high-profile “Moneymaker” lawsuit against PayPal. This case targets PayPal’s alleged unlawful account seizures, including those involving gambling-related accounts. In the latest appellate filing, California attorneys Eric Bensamochan and Edwin Schreiber continue to challenge a June 2022 lower-court ruling that dismissed the case and sent the claims about PayPal’s seizures back to its internal arbitration process.
The legal action began in April 2021 when PayPal seized $12,000 from Chris Moneymaker’s personal account. The funds were fees for a DFS league Moneymaker managed. After PayPal seized the money, Moneymaker publicly criticized the company on social media, hired Bensamochan, and called for others to join the fight against the “payments bully,” PayPal.
Moneymaker’s fame, mainly from his historic 2003 World Series of Poker main event victory, attracted widespread attention to the case. PayPal eventually reversed its decision and returned Moneymaker’s funds, but by then, the groundwork for a potential class action had been laid. Lena Evans, the founder of the Poker League of Nations and another alleged victim of PayPal’s seizures, took over as the lead plaintiff in the case.
Latest filing restates PayPal’s illegal actions under California law
At the heart of the complaint is PayPal’s one-sided and burdensome terms of service. The lawsuit, now with three plaintiffs, including Evans, argues that the treatment of potentially thousands of affected PayPal users is unlawful. If the case proceeds in the court system rather than in arbitration, many other users could join the lawsuit.
The latest appellate brief challenges PayPal’s forced arbitration process, citing California law, which may invalidate PayPal’s mandatory arbitration clause. Drawing from prior case law about “unconscionable” contract clauses—those that result in “overly harsh or one-sided results that ‘shock the conscience'”—the plaintiffs argue that PayPal’s contract is unconscionable. One example is PayPal’s right to freeze an account for up to 180 days without providing an explanation. Additionally, PayPal does not allow users to present evidence on their behalf before freezing accounts.
The plaintiffs also accuse PayPal of sending tax statements to customers after seizing their funds. The filing alleges that PayPal does not disclose why accounts are frozen, and the seized funds are often kept by PayPal without fair compensation to the users.
One clause from PayPal’s terms of service reads, “If we believe that you’ve engaged in any of these activities, we may take a number of actions to protect PayPal, its customers and others, at any time in our sole discretion.” This clause is a central part of the plaintiffs’ argument, as they assert that such terms violate California contract law.
Appellate battle and further challenges
The Ninth Circuit Court of Appeals case could continue for several more months, and if the lower court’s ruling is reversed, a final resolution may take years. The original court had dismissed the case, sending it to PayPal’s arbitration process and combining it with another case involving similar actions by PayPal. The plaintiffs argue that this was a “reversal judicial error.”
In parallel, Bensamochan and other consumer protection attorneys have filed a similar case against Amazon in Singapore. This lawsuit also targets the company’s one-sided terms of service and is being pursued by 4,000 litigants who are using a blockchain-based agreement system to assign their rights to a case manager.
Chris Moneymaker, while no longer directly involved in the legal case, continues to voice his frustration with PayPal publicly. His pinned tweet on Twitter remains a strong message against the company.
