PayPal is the latest corporation to join Public Citizen’s “rogues gallery,” a continually updated list of corporations that insert forced arbitration clauses in their terms of service with consumers.
These terms effectively force its customers to surrender their time-honored right to seek redress in court, and require them to resolve disputes in secret arbitration, where PayPal dictates the rules for the process.
PayPal’s new terms, which become effective on November 1, also deny users their right to band together in class actions, which are useful to seek accountability against companies who cheat large numbers of consumers out of individual small amounts of money. Most consumers are not going to seek to recover for small losses on their own. Meanwhile, by forbidding class actions, corporations can reap the benefit of their misconduct.
PayPal, however, gives users the ability to “opt-out” of the arbitration terms. Consumers must opt out by mail, which is quite ironic given the fact that every other consumer transaction with PayPal takes place online, with a simple click of a button.