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How to Sue Paypal using their Arbitration Agreement [Dispute Guide]

Updated October 27th 2022

3 min read

Arbitration can help protect you against violations of your agreement with PayPal

How to Sue Paypal using their Arbitration Agreement [Dispute Guide]

How to Sue Paypal using their Arbitration Agreement [Dispute Guide]

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Trey Salm

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Dispute is the easiest & most accurate small claims platform with affordable ways to resolve every dispute.

If you use Paypal to make purchases or connect it to a small business account, there may come a time when your account is suspended. That can leave you with questions like "How do I get my Money Back?" and "How do I get paid back for the damages done to my business?"

The solution is located within Paypal's "User Agreement," which governs the application you signed to use their platform. One solution is to sue PayPal in small claims court. But what if your dispute falls outside the court's jurisdiction? In that case, you can use arbitration.

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How does Arbitration against PayPal work:

  1. The Start: To begin an arbitration proceeding, you must send a "Demand for Arbitration" letter, a copy of the arbitration provision from the contract between the parties, and the appropriate filing fee to the American Arbitration Association (AAA).
  2. Confirmation from the AAA: The AAA will respond and acknowledge your request within approximately 15 days. The arbitration organization will offer PayPal a response and the ability to file a counter-claim.
  3. Choosing your arbitrator: The AAA will then provide both parties with a list of possible arbitrators from the AAA National Roster of Arbitrators. If you cannot agree with PayPal upon the arbitrator, the AAA will reach out with a deadline for you to state your preferences from the list. After, the AAA will choose the most mutually agreed upon an arbitrator(s) to oversee the case. This can take up to 30 days.
  4. Preliminary Hearing: Next, the AAA will set a date for a "preliminary hearing." The arbitrator hosts both parties. The hearing is the first time you, PayPal, and the arbitrator will discuss the case. You may consider discussing case information, witness lists, and upcoming dates in the process.

At the hearing, the "Scheduling Order" is established. This document dictates specific dates for both parties to submit more detailed statements of claims, file requests for production, complete depositions, disclose experts, and file dispositive motions. It will also state when the official hearing is to take place.

  1. The Hearing: Your official hearing follows the preliminary hearing and the deadlines set by the scheduling order. Both parties present their arguments through testimony and evidence submission to the arbitrator.
  2. Post-Hearing Submissions: Sometimes, but not always, the arbitrator may allow either party to submit additional documentation, usually shortly after the hearing, for consideration.
  3. The Award: The arbitrator closes the record and within 30 days, issues a decision addressing all claims raised in the arbitration.

The award may direct one of the parties to pay a monetary amount or direct parties to take specific actions. Aside from any administrative matters unrelated to the case's merits, the services of the arbitrator and the AAA are completed when the award is issued. 

Frequently Asked Questions about Arbitration with PayPal:

  • "How much does it cost?" - The AAA has tiered pricing based on their Commercial Arbitration services. Dispute's platform can help you generate, file, and serve your claim for $299 plus AAA's fees.
  • _"How long does it take?" - T_he AAA estimates up to 288 days for the entire process to conclude.
  • How do I start? - Dispute can help you generate and file your Demand for Arbitration package from your phone.

Have multiple cases? Learn more about high-volume discounts or our self-managed enterprise product.

Get Dispute to file your small claims case online today.
Win back the money you deserve.

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