Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 1 of 37
`
`
`
`
`
`
`
`THE BENSAMOCHAN LAW FIRM INC.
`Eric Bensamochan, Esq. SBN 255482
`Deborah C. Silver, Esq. SBN 128495
`9025 Wilshire Blvd Suite 215
`Beverly Hills, CA. 90211
`Telephone: (818) 961-0138; Facsimile: (818) 230-1931
`Email: eric@eblawfirm.us
`Email: deborah@eblawfirm.us
`
`Schreiber & Schreiber, Inc.
`Eric A. Schreiber, Esq. SBN 194851
`Ean M. Schreiber, Esq. SBN 284361
`16633 Ventura Blvd Suite 1245
`Encino, CA. 91436
`Telephone: (818) 789-2577: Facsimile: (818) 789-3391
`Email: eric@schreiberlawfirm.com
`Email: ean@schreiberlawfirm.com
`
`
`Attorney for Plaintiffs Lena Evans, Roni Shemtov, and Shbadan Akylbekov
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`
`
`
`
`
`
`LENA EVANS, RONI SHEMTOV, and
`SHBADAN AKYLBEKOV, individually and
`on behalf of all others similarly situated,
`
`
`
`Plaintiffs,
`
`
`v.
`
`PAYPAL,INC., a Delaware Corporation; and
`DOES 1-25, inclusive,
`
`
`
`Defendants.
`
`
`
`
`
`
`
`
`
`
`
`CASE NO.
`
`COMPLAINT:
`(CLASS ACTION)
`
`1. CONVERSION
`2. CIVIL RICO 18 U.S.C. § 1964(c)
`3. VIOLATION OF THE ELECTRONIC
`FUNDS TRANSFER ACT 15 U.S.C.
`§1693 ET SEQ.
`4. BREACH OF WRITTEN
`CONTRACT;
`5. BREACH OF FIDUCIARY DUTY;
`6. VIOLATION OF CALIFORNIA
`BUSINESS & PROFESSIONS CODE
`§17200
`7. UNJUST ENRICHMENT;
`8. DECLARATORY RELIEF;
`9. ACCOUNTING
`
`
`
`CLASS ACTION COMPLAINT
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 2 of 37
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`CLASS ACTION
`DEMAND FOR JURY TRIAL
`
`Plaintiffs LENA EVANS, RONI SHEMTOV, and SHBADAN AKYLBEKOV (collectively,
`“Plaintiffs”), individually and on behalf of all others similarly situated, through their undersigned
`counsel, alleges for their Class Action Complaint against Defendant, PAYPAL, INC.,
`(“Defendant”) based upon personal knowledge as to themselves and their own acts and experiences,
`and, as to all other matters, upon information and belief, including the investigation conducted by
`their counsel, as follows:
`I.
`NATURE OF THE ACTION
`1. Plaintiffs bring this class action against Defendant PAYPAL, INC. ("PayPal") to
`recover damages and other relief available at law and in equity on behalf of themselves, as
`well as on behalf of the members of the class defined herein, to rectify PayPal's inequitable
`and unconscionable conduct detailed herein.
`2. This action stems from Defendant’s widespread business practice of unilaterally
`seizing funds from its clients’ financial accounts, without cause and without any fair or due
`process.
`3. PayPal places a "hold" on Plaintiffs' own funds in their own PayPal accounts. PayPal
`has failed to inform Plaintiffs and members of the class of the reason(s) for the actions
`PayPal has taken, even telling Plaintiffs and members of the class that they will "have to get
`a subpoena" to learn the simple information as to why PayPal was holding, and denying
`Plaintiffs, access to their own money.
`4. PayPal excuses its unlawful seizure based on an alleged violation of its Acceptable
`Use Policy (“AUP”) without stating in what way Plaintiffs’ use of their PayPal accounts
`violates the AUP, and without even bothering to provide Plaintiffs with a copy of the AUP
`at or around the time that Plaintiffs began using PayPal.
`5. PayPal’s application of an unlawful and unenforceable liquidated damages clause,
`which is a contract of adhesion, without any causal connection to any damages PayPal
`actually suffered, as a justification for its wholesale seizure of the entire balance of
`
`- 2 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 3 of 37
`
`
`
`Plaintiffs’ PayPal accounts, and transferring said balance to PayPal’s own account, for
`PayPal’s own use, is inequitable and unconscionable, amounting to nothing less than a
`conversion of funds which do not belong to PayPal.
`6. Defendant operates the immensely popular PayPal online payment platform. As part
`of this platform, users such as Plaintiffs and the proposed class members maintain account
`balances which includes funds the users have transferred into the PayPal platform as well as
`money sent to the users by customers and other users. These funds belong to the users, not
`Defendant.
`7. Nevertheless, Defendant has adopted a business practice of unilaterally seizing some
`or all of its users’ funds when Defendant merely suspects the user in question violated
`Defendant’s AUP, which is a set of restrictions Defendant places on certain transactions
`made through the PayPal platform.
`8. Upon information and belief, Defendant seizes these funds without first obtaining
`any conclusive determination of actual breaches by the users of the AUP – indeed,
`Defendant does so without even conducting a reasonable investigation to determine whether
`any violation occurred.
`9. Rather, Defendant has adopted a business policy of “shooting first and asking
`questions later” – taking the money for itself and only afterwards, and occasionally,
`interacting with the users to determine whether the seizure was appropriate.
`10. Moreover, the amounts that Defendant seizes bear no relationship to any actual
`damages suffered by Defendant. Rather, Defendant arbitrarily seizes amounts based on a
`liquidated damages provision buried in Defendant’s User Agreement which has no
`connection to the actual damages suffered by Defendant – indeed, which is often used where
`Defendant has suffered no damages whatsoever.
`11. PayPal violates its own Agreement by failing to provide adequate notice to users
`whose accounts have had holds placed on them. When PayPal informs individuals whose
`funds are being held of the holds, it does not inform such users why such funds are being
`
`- 3 -
`CLASS ACTION COMPLAINT
`
`

`

`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 4 of 37
`
`
`
`held, how they can obtain a release of the hold, and/or how they can avoid future holds
`being placed on their accounts.
`12. The Agreement requires PayPal to, at a minimum, provide notice to such users of
`any hold placed on their accounts that includes both the reason for the hold and an
`opportunity to request restoration of access to the held funds. PayPal's "notice" falls far short
`of what is required. As a result, Plaintiffs have no idea why their money is "held" by PayPal.
`13. PayPal seizes the money permanently after the 180-day hold period ends, without
`notice and without explanation.
`14.
`PayPal’s user agreement and acceptable use policy cannot be used as a
`“license to steal.” There is no equitable or legal argument which condones theft.
`
`JURISDICTION AND VENUE
`15.
`This Court has jurisdiction over this action pursuant to the Class Action
`Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), because this is a class action where a
`substantial number of the members of the proposed class of plaintiffs are citizens of a state
`different from Defendant and the aggregated amount in controversy exceeds $5,000,000,
`exclusive of interest and costs.
`16.
`This Court has personal jurisdiction over Defendant because it maintains its
`principal place of business in the State of California, and regularly solicits and conducts the
`business at issue in this Complaint within the State of California.
`17.
`Venue is proper in this District pursuant to 28 U.S.C. § 1391, because a
`substantial part of the events giving rise to the claims asserted herein occurred in the
`Northern District of California, and specifically the County of Santa Clara, where Defendant
`is headquartered and where Defendant conducts extensive business.
`18.
`This Court has original subject-matter jurisdiction pursuant to 18 U.S.C. §
`1964(c) and 28 U.S.C. § 1331 because this action arises, in part, under the Federal Racketeer
`Influenced and Corrupt Organizations Act (“Federal RICO”).
`
`
`
`
`
`II.
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`- 4 -
`CLASS ACTION COMPLAINT
`
`

`

`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 5 of 37
`
`
`
`
`
`
`
`19.
`This Court has jurisdiction over Plaintiffs’ related state and common law
`claims pursuant to the doctrine of supplemental jurisdiction, 28 U.S.C. § 1367.
`20.
`This Court further has personal jurisdiction over Defendants under 28 U.S.C.
`§ 1965(b) because in any action brought pursuant to the Federal RICO statute in a U.S.
`District Court, that Court may cause parties residing in another district to be summoned to
`that district if the “ends of justice require” it.
`21.
`Defendants purposefully directed conduct at this forum with respect to their
`scheme to unlawfully seize monies from user accounts of Plaintiffs and the Class members,
`and to convert and divert those monies for its own use by transferring those monies into
`PayPal’s own accounts, under the guise of purported violations of its Acceptable Use Policy
`(“AUP”) where, in fact, there is no evidence that Plaintiffs and Class members committed
`any illegal acts in the use of their PayPal accounts.
`22.
`Venue is proper in this District pursuant to 28 U.S.C. §1391(b)(2) because a
`substantial part of the events or omissions giving rise to Plaintiffs’ claims occurred within
`this judicial district. Venue is further proper in this District pursuant to 18 U.S.C. § 1965(a)
`because Defendants conduct and/or transact their affairs in this District given each
`Defendant’s participation in the Enterprise, as alleged below.
`
`
`III. THE PARTIES
`23. Plaintiff Lena Evans (“Evans”) is a natural person who resides in San Diego,
`California. Ms. Evans is a member of the putative class defined herein, and has been a
`PayPal user for over 22 years since she opened her Ebay account in or around August of
`1999.
`24. Plaintiff Roni Shemtov is a natural person who resides in Los Angeles, California.
`Ms. Shemtov is a member of the putative class defined herein, and has been a PayPal user
`since 2014.
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`- 5 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`IV.
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 6 of 37
`
`
`
`25. Plaintiff Shbadan Akylbekov operates businesses located in Chicago, Illinois. Mr.
`Akylbekov is a member of the putative class defined herein and has been a PayPal user since
`March of 2016.
`26. Defendant Paypal, Inc. is a Delaware corporation. Upon information and belief, its
`corporate headquarters are located at 2211 North First Street, San Jose, California 95131.
`See https://www.paypal.com/in/webapps/mpp/about.
`27. The true names and/or capacities, whether individual, corporate, associate or
`otherwise, of Does 1 through 25, inclusive, are unknown to Plaintiffs at this time, and
`Plaintiffs therefore sue said Defendants by such fictitious names. Plaintiffs are informed and
`believe and thereupon allege that each of the Defendants fictitiously named herein as a DOE
`is legally responsible, negligently or in some other actionable manner, for the events and
`happenings hereinafter referred to, and thereby proximately and legally caused the injuries
`and damages to Plaintiffs as hereinafter alleged. Plaintiffs will ask leave of court to amend
`this Complaint to insert the true names and/or capacities of such fictitiously named
`Defendants when the same have been ascertained.
`FACTUAL BACKGROUND
`A.
`The PayPal Financial Platform
`28. Defendants operate PayPal, an immensely popular digital payments platform with
`an estimated 325 million active account holders worldwide.
`29. Through Defendants’ platform, users make online money transfers to other users,
`serving as an electronic alternative to traditional paper methods such as cash, checks and
`money orders. The company further operates as a payment processor for online vendors,
`auction sites and other commercial users.
`30. As part of the functionality of Defendants’ platform, users may maintain a PayPal
`balance account where funds are kept until used or transferred by the account holder. As
`with traditional banks, PayPal users can transfer funds into their PayPal balance accounts
`from other banking sources. In addition, they can receive payments to their PayPal accounts
`
`- 6 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 7 of 37
`
`
`
`from other users or third parties. Vendors and service providers in particular have the option
`of receiving payments from their customers directly to their PayPal accounts.
`31. When obtaining a PayPal user account, each user is purportedly required to indicate
`they agree to Defendant’s “User Agreement.” The User Agreement is a dense document
`which in its current form spreads over nearly seventy pages when downloaded as a PDF. See
`https://www.paypalobjects.com/marketing/ua/pdf/US/en/ua-092121.pdf.
`32. The current version of the User Agreement is 65 pages and can be found at the
`following link: https://www.paypal.com/us/webapps/mpp/ua/useragreement-full
` “The user agreement will be effective for all users as of December 10, 2021.”
`33. Moreover, the User Agreement is presented as a “take it or leave it” agreement with
`no opportunity for users to negotiate portions before registering their accounts. Although the
`User Agreement has been amended throughout the relevant time period, at all relevant times
`the User Agreement constituted a lengthy contract of adhesion with no opportunity for
`users’ revisions.
`34. PayPal's actions are all the more unreasonable in light of the fact it is attempting to
`invoke a contract term in a classic contract of adhesion. The language upon which
`PayPal relies is contained in a form contract that is viewed online. It is provided on a take it
`or leave it basis.
`35. There is a tremendous disparity in bargaining power, as a predominant portion of
`members of the Class need to be able to accept payment via PayPal in order to sell goods.
`36. To interpret the ambiguous language upon which PayPal apparently relies in
`PayPal's favor is against all equity and contrary to prevailing rules of contractual
`construction.
`37. Indeed, PayPal's behavior violates the covenant implicit in all contracts - but more
`so, implicit in contracts of adhesion such as the PayPal User Agreement - to act and deal in
`good faith.
`
`- 7 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 8 of 37
`
`
`
`38. Among the terms in the User Agreement is a provision stating that “[i]f [the user]
`violated our Acceptable Use Policy, then you’re also responsible for damages to PayPal
`caused by your violation of this policy.”
`39. The provision goes on to state that:
` “If you are a seller and receive funds for transactions that violate the
`Acceptable Use Policy, then in addition to being subject to the above actions you
`will be liable to PayPal for the amount of PayPal’s damages caused by your
`violation of the Acceptable Use Policy. You acknowledge and agree that $2,500.00
`U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable
`minimum estimate of PayPal’s actual damages - including, but not limited to,
`internal administrative costs incurred by PayPal to monitor and track violations,
`damage to PayPal’s brand and reputation, and penalties imposed upon PayPal by
`its business partners resulting from a user’s violation - considering all currently
`existing circumstances, including the relationship of the sum to the range of harm
`to PayPal that reasonably could be anticipated because, due to the nature of the
`violations of the Acceptable Use Policy, actual damages would be impractical or
`extremely difficult to calculate. PayPal may deduct such damages directly from any
`existing balance in any PayPal account you control.”
`40. The AUP itself is not included in the User Agreement, but rather is a separate
`document that users must access via a hyperlink or otherwise located on Defendant’s
`website.
`41. These provisions explicitly only allow for Defendant to collect damages if there has
`been a violation of the AUP – not merely a suspected violation, or an alleged violation.
`Moreover, even where there is an actual violation, users are expressly only liable to
`Defendant for Defendant’s “damages” caused by said violation.
`42. Nevertheless, Defendants routinely engage in “self-help” under the cover of this
`provision by withdrawing money – sometimes entire account balances – from its users’
`accounts and transferring those funds to itself based merely on suspected or alleged
`
`- 8 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 9 of 37
`
`
`
`violations of the AUP. Upon information and belief, Defendants do so without first
`conducting any reasonable investigation to determine whether an actual violation of the
`AUP occurred, much less obtaining a final judgment or court order confirming the purported
`breach of the parties’ agreement. Indeed, Defendants often decline to even contact the user
`in question to obtain an explanation for the activity before seizing the funds.
`43. Moreover, Defendants routinely deduct sums from its users’ balances which have
`no correlation to any damages actually suffered by Defendants – indeed, Defendants do so
`even if it suffered no demonstrable damages whatsoever.
`44. To make matters worse, Defendants offer no reasonable way for users to challenge
`Defendants’ actions or to obtain any due process from Defendants. As noted above,
`Defendants routinely act without first contacting the user in question or allowing them any
`opportunity to explain or dispute whether the activity is in violation of the AUP. And once a
`user becomes aware of Defendants’ actions, they are often unable to obtain any assistance
`through Defendants’ mediocre customer support. Even if the user is able to reach a live
`customer support employee of Defendants, the employee is typically either unable or
`unwilling to provide any meaningful information about the seizure or a reasonable means of
`challenging Defendants’ decision.
`
`Allegations Specific To Named Plaintiffs
`
`1.
`
`45. Ms. Evans has been using the PayPal platform for over 22 years. She began using
`PayPal when she opened her Ebay account in or around August of 1999.
`46. She uses PayPal for buying and selling varied items (used and new articles of
`clothing), mostly on Ebay.
`47. She also uses PayPal for her non-profit organization (“Poker League of Nations” --
`also known as “PLON”) which helps women with various needs (veterans, breast cancer,
`child custody and other varied needs).
`48. She also uses PayPal to exchange money for a poker league she owns and manages.
`
`Lena Evans
`
`B.
`
`- 9 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 10 of 37
`
`
`
`49. Without any advance warning, on or about November 22, 2020, Ms. Evans learned
`that her PayPal account was frozen.
`50. On or about May 22, 2021, Ms. Evans learned that PayPal seized $26,984.00 from
`her PayPal account without ever telling Ms. Evans why.
`51. Ms. Evans emailed PayPal a number of times, but she never received any response.
`She also tried calling PayPal a number of times, but was never able to reach a live person.
`
`
`2.
`Roni Shemtov
`52. Ms. Shemtov has been using PayPal since 2014, to sell yoga clothing on Ebay.
`53. In March of 2017, Ms. Shemtov learned that PayPal froze her account.
`54. Ms. Shemtov made multiple attempts to reach a live PayPal employee on the
`telephone, but the employees she reached told her that her account was frozen and closed,
`and then hung up on her. She was never given any reason why her account was terminated.
`55. At some point she learned that between March 24, 2017 and December 27, 2017,
`PayPal was investigating her, but she did not know why.
`56. Six months later, in September of 2017, Ms. Shemtov learned that PayPal seized
`$10,000 from her PayPal account.
`57. On or about November 26, 2019, Ms. Shemtov learned that PayPal seized another
`$32,351.87 from her PayPal account. A true and correct copy of a screenshot evidencing the
`amount and date of the seizure is attached hereto as Exhibit “1” ($32,351.87, entitled a
`“Transfer,” on November 26, 2019).
`58. Ms. Shemtov did not use her PayPal account for any transaction after she learned
`that PayPal seized money from her account other than checking the balance of her account.
`When she checked the balance in her account, Ms. Shemtov learned that she had a zero
`balance.
`59. Ms. Shemtov sent a letter to PayPal’s lawyer after learning her name was Cassandra
`Knight, to PayPal’s address, listed as “2211 N. 1st St, San Jose, CA. 95131-2021” -- at the
`following website: https://apps.calbar.ca.gov/attorney/Licensee/Detail/175696.
`60. Ms. Shemtov did not receive any response from PayPal’s lawyer, Cassandra Knight.
`61. She tried calling PayPal and spoke with a different person on at least three different
`occasions. One person told Ms. Shemtov that she violated PayPal’s Acceptable Use Policy
`
`- 10 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 11 of 37
`
`
`
`(“AUP”) by using the same IP address and computer that other PayPal users used --
`notwithstanding that other PayPal users had different names, social security numbers and
`addresses than Ms. Shemtov.
`62. Another person told Ms. Shemtov that she violated PayPal’s AUP by having and
`using multiple PayPal accounts, which is not true, Ms. Shemtov has only ever had and used
`one PayPal account.
`63. A third person employed by PayPal told Ms. Shemtov that she violated PayPal’s
`AUP by selling her yoga clothing at 20-30% below the retail price, which is not relevant.
`She was selling authentic merchandise. It was her decision to set the price for the items of
`clothing which she was selling.
`64. All the reasons PayPal employees gave Ms. Shemtov for freezing her account and
`for seizing $42,737 from her PayPal account are ludicrous.
`65. Ms. Shemtov was sent an IRS form dated 9/1/2020, stating that she owed taxes on
`this $42,737 which PayPal seized from her!
`66. Ms. Shemtov believes that she ended up having to pay approximately $1,000 in
`taxes on money that PayPal seized from her.
`
`
`3.
`Shbadan Akylbekov
`67. Mr. Akylbekov began using PayPal on May 16, 2016, opening an account for his
`personal use.
`68. His wife, Aigerim Tobokelova, opened a separate PayPal account in the name of
`her wholly owned company, Azyk Logistics, Inc., in or around January of 2020. Azyk
`Logistics, Inc. performs truck repair services, owns and rents trucks, and uses trucks for
`interstate hauling.
`69. On January 4, 2020, Mr. Akylbekov began using the Azyk Logistics PayPal
`account for the sale of Hyaluron Pens. He is the CEO of Hyaluron Pen Store, LLC, a
`company that was created on June 12, 2020.
`70. A Hyaluron Pen is a biologic injectable using hyaluronic acid, which is a beauty
`product for the treatment of facial wrinkles and acne scars. The device is manufactured by a
`Korean company. It has the European equivalent of FDA approval. While not yet approved
`by the FDA the product is very popular.
`71. Mr. Akylbekov also operates a real estate business.
`
`- 11 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 12 of 37
`
`
`
`72. About 2-3 months after Mr. Akylbekov started using PayPal for the sale of
`Hyaluron Pens he began hearing from customers that they were not able to complete their
`transactions using PayPal. It was only then that Mr. Akylbekov learned that PayPal had
`limited his account without informing him.
`73. PayPal did not give him any explanation for limiting his account. He was told by
`someone from PayPal that his funds would be held in his account for 180 days, after which
`they would be made available to him for transfer to his bank account.
`74. He received payments for Hyaluron Pens until March 4, 2020, after which his
`PayPal account was limited.
`75. On May 3, 2021, Mr. Akylbekov sent an email message to PayPal referring to a
`telephone conversation with PayPal customer service representative Maria Patricia, stating
`as follows:
`“To whom it may concern from PayPal,
`
`We have received your message from the BBB complaint we have filed.
`
`We just have a couple more questions.
`
`1. Our account was put on limitations on March 4, 2020. We were told to
`wait 180 days to hear back about our account and were informed that
`we would be able to transfer the money out. However, on August 4, 2020, without
`any warning the money was transferred to PayPal and we were never notified of this
`transfer or the decision that PayPal came down to. The very last transaction was done
`by PayPal on August 4, 2020 where the funds of $172,206.43 was transferred to
`PayPal. We want to know why our funds were emptied to PayPal.
`
`2. We called and talked to your customer service and account limitation
`team after our account was limited, we were given no answer other than
`to wait 180 days for PayPal to come to a decision and that we would
`receive an email once that 180 days passed. It’s been over 180 days and
`ever since the 180 days we've been calling PayPal trying to figure out
`what solution you guys came down to and we haven’t heard anything.
`We didn’t receive that email that was promised to us and we want to
`know why we didn’t receive this email.
`
`3. We finally heard on May 3, 2021, when we talked to your customer
`service team, Maria Patricia, who informed us why our account was
`closed, and where the funds of $172,206.43 that PayPal took was. She
`informed us that from our transaction history that after the August
`4,2020, that withhold amount of $172,206.43, some of the money was
`refunded back to our customers and some of the amount was used for
`“damages caused by us to PayPal from the user policy that we broke.
`
`- 12 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 13 of 37
`
`
`
`
`From our side, the only transaction that we could see was the one of
`August 4, 2020 and nothing after that. We were informed that she will download
`those transactions she could see and send it to us but
`when we received the email there was no attachment.
`We contacted multiple times trying to receive this attachment of our transaction
`history of where that $172,206.43 went to. We haven’t received anything yet, so we
`are demanding that we get a copy of this transaction of PayPal refunding that
`$172,206.43 to our customers and exactly how much PayPal is keeping for the
`damage.
`
`4. We are also receiving calls saying that our account is at a negative
`balance of $127.25 because of a refund of a customer. We contacted
`your customer service asking where this amount was coming from and
`was informed that they do not see this negative charge. We would
`happily send that money back to our customer, but we were told PayPal
`refunded all our funds so that customer should already have received
`her refund from PayPal either way. So why are we still receiving these
`messages and calls.
`
`Sincerely, Aigerim Tobokelova”
`
`76. From the beginning of June 2020, multiple customers contacted Mr. Akylbekov,
`stating that PayPal sent them invoices to pay for orders they did not place, during the time
`that PayPal had limited the PayPal account used for sales of the Hyaluron Pens. True and
`correct copies of the customer communications are attached hereto as Exhibit “2.”
`77. Mr. Akylbekov kept checking the balance in his PayPal account from time to time,
`and learned at or around August 4, 2020, that PayPal had seized $172,206.43 from his
`account, without explanation and without notifying him that the funds had been seized by
`PayPal and transferred to PayPal’s account.
`78. After calling and speaking with different PayPal customer service employees over
`the telephone, Mr. Akylbekov received no explanation why PayPal seized the money in his
`PayPal user account.
`79. Mr. Akylbekov sent two letters to the legal department of PayPal, to its address at
`2211 North 1st Street, San Jose, CA. 95121, but he never received any reply.
`80. Mr. Akylbekov then filed a Complaint against PayPal with the Better Business
`Bureau and thereafter received a reply to his Better Business Bureau Complaint No. 914533,
`from Soumya A. R., Executive Escalations for PayPal.
`
`- 13 -
`CLASS ACTION COMPLAINT
`
`

`

`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 14 of 37
`
`
`
`81. This letter dated May 18, 2021, claimed that Aigerim Tobokelova, the wife of
`Shbadan Akylbekov, violated PayPal’s User Agreement and Acceptable Use Policy
`(“AUP”) by accepting payments for the sale of injectable fillers not approved by the FDA.
`82. This letter claimed that the money seized was debited from her PayPal account
`balance “for its liquidated damages arising from those AUP violations pursuant to the User
`Agreement.”
`83. Mr. Akylbekov never received a copy of the AUP or the User Agreement until
`PayPal limited his account and seized the monies from his PayPal user account, transferring
`it to PayPal’s own account, without notice or explanation.
`84. After discovering that his account was limited, Mr. Akylbekov was informed of the
`AUP and was referred to a link to the AUP which was accessible from his PayPal account.
`85. PayPal never returned the $172,206.43 to his PayPal user account.
`
`
`
`86. PayPal later claimed that it used these funds to reimburse customers who had
`purchased the Hyaluron Pens, and to compensate PayPal for its damages.
`87. No customer ever told Mr. Akylbekov that he or she received a refund from
`PayPal. On information and belief, PayPal kept the entire $172,206.43 for itself, without
`giving a refund to any customers.
`88. In the letters sent to PayPal’s legal department, Mr. Akylbekov requested
`documents which evidenced the amounts and identity of customers that were purportedly
`issued refunds.
`89. He was told by a PayPal customer service supervisor that the documents were being
`downloaded and would be provided to him within 2 days. To this day no documents were
`ever given.
`90. The May 18, 2021, letter references a customer requesting a refund because the
`item was not received. Instead of using some of the $172,206.43 it seized, PayPal demanded
`that Mr. Akylbekov pay this customer, which he did.
`Mr. Akylbekov asked PayPal why a customer was requesting a refund after PayPal had
`claimed that it issued refunds to his customers related to his sale of the Hyaluron Pens.
`91. PayPal later sent a Form 1099K to Azyk Logistics, Inc., a company owned by Mr.
`Akylbekov’s wife, stating that the sum of $162,517.19 was paid as the “gross amount of
`payment third party network transactions” even though PayPal seized all of this money and
`
`- 14 -
`CLASS ACTION COMPLAINT
`
`

`

`Case 5:22-cv-00248 Document 1 Filed 01/13/22 Page 15 of 37
`
`
`
`transferred it to PayPal’s own account, and never returned a cent of that money to his PayPal
`user account.
`92. PayPal essentially claimed a deduction for an expense that it never paid. PayPal
`seized $172,206.43, while reporting only $162,517.19 to the IRS.
`93. PayPal’s transactions and practices are illegal, highly questionable and akin to
`outright theft.
`94. It is wrong for Plainti