Back

The PayPal User Agreement 2003

The first thing one notes in comparing the old agreement to the new, is that the old agreement was a long one page document (approx 19,620 words 265KB - for comparison an issue of TAGnotes runs approx 5000 words) with just about all the necessary information contained in that one page, and that page in a fairly comprehensible format, though a bit ambiguous in some areas. The new user agreement is 26541 words (460KB) with 12 sections incorporated by reference (a favorite ebaY trick to make it very difficult to see when changes have been slipped in without notice).

The Agreement
The old agreement was self contained. New agreement has 12 sections of further terms and conditions incorporated by reference. In addition to the sections incorporated by reference ebaY says it has " other pages and websites referred to in this document, as they may contain further terms and conditions that apply to you as a PayPal user. Please note: underlined words and phrases are links to these pages and websites. By accepting this Agreement, you also agree that your use of other PayPal websites and Services will be governed by the terms and conditions posted on those websites." This makes the user agreement infinite and unknowable, and in fact no agreement at all because it is written in water. For an agreement to be valid, it has to be finite and defined, which this is not.

The old agreement required no prior notice period for changes unless required by law. The new agreement requires 30 days notice in some cases, but no notice in others.

1. Eligibility ebaY has added this section which appeared in part II of the old agreement. The content is basically the same and says you may have one personal and one premier or business account, that in order to accept credit cards you must have a premier or business account and if you are using PayPal to conduct or in conjunction with a business you must upgrade to either a premier or business account. The biggest change is the addition of the words "in conjunction with a business", which appears to add language that allows ebaY to force almost any free personal account holder to accept a premier or business account if they want to continue using PayPal.

2. The Legal Relationship between You and PayPal. 2.1 Appointed Agent. This is the same as in the old agreement section I The Legal Relationship between You and PayPal

2.2 Internet Service Provider. This addition lays out ebaY's "venue only" stance, " We do not have any control over the products or services that are paid for with our Service. We cannot ensure that a buyer or a seller you are dealing with will actually complete the transaction."

2.3 Identity Authentication This clause allows ebaY to order a credit report on you at any time for any reason, without informing you or asking your permission. The old agreement had the same clause.

2.4 Release. ebaY has added this clause to protect themselves from any dispute between PayPal users. If you are a California resident, you waive California Civil Code §1542

2.5 No Warranty. ebaY has added this section and made it a much broader and inclusive dismissal of responsibility for anything, including the timeliness of transactions it executes and other implied warranties. Some state laws do not permit a company such as ebaY PayPal to excuse itself from responsibility, so check your state's laws for specifics in your state. This clause does not include the money back insurance policy buyers may purchase from PayPal on certain transactions.

2.6 Limit of Liability. Another added clause attempting to provide ebaY PayPal with protection against any liability for losses or damage, even if ebaY PayPal was negligent. This is "LIMITED TO THE GREATER OF (A) THE AMOUNT OF FEES YOU PAY TO US IN THE 12 MONTHS PRIOR TO THE ACTION GIVING RISE TO THE LIABILITY, AND (B) $100." Some states do not allow the exclusion of limitation of incidental or consequential damages so the above limitation or exclusion may not apply to you. Check your state's laws for specifics in your state.

2.7 Indemnification. This is to protect ebaY against any third party claims caused by your breach of their user agreement, breaking the law or violating someone's rights.

3. Fees. These have not changed... yet.

4. International Use. This appears materially unchanged. There is an addition of a list of countries whose residents may withdraw funds from their PayPal account to a local bank account, and are considered "Withdrawal Countries" including - Australia, Canada, Denmark, Finland, France, Germany, Hong Kong, Japan, Mexico, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, United Kingdom.

5. Receiving Payments. 5.1 Credit Card Funded Payments. Though this starts out the same as the old agreement, it does not end that way. The old agreement comments here that sellers eligible for the seller protection plan, would not be subject to a chargeback, but this new agreement appears to make all sellers liable, even if they fulfilled the seller protection plan requirements. "By accepting a credit card payment, you agree that you are responsible for the payment if it is reversed. If such reversal occurs on a credit card funded payment made to your account, we are required by law to reverse the payment and may debit your PayPal account balance to pay for the reversal. If your PayPal account balance is insufficient to pay the reversal, you authorize PayPal to debit your bank account on file to collect the amount owed." It also authorizes ebaY to debit your checking/bank account without specific approval to do so, as did the old user agreement.

5.2 Removal of Expired Cards. no significant change

5.3 Withdrawals. The overall information in this clause is the same but the devil is in the details. The new user agreement is very vague, and appears to say ebaY can limit your ability to withdraw money from your account for any reason, at any time and for any amount. They do not specifying what the limits are or what you need to do to get a limit lifted. "Generally, in order to withdraw more than $500 per month, we require you to complete a [grammatical error is ebaY's] some authentication procedures, such as confirming: your email address, your bank account, and your social security number." There are several countries from which account holders can't withdraw money at all, but can only send payments from account to account.

6. Sending Payments. This whole section has been rewritten and reorganized but appears to have the same information as the old agreement, except as noted.

6.1 Sending Payments. "Generally, accounts that have a confirmed email address and credit card on file may send up to $2000. Accounts that are Verified by adding and confirming a bank account will receive a higher Sending Limit or no limit at all."

6.2 Completing Your PayPal Membership. International and some domestic users will have to complete a membership process before they can send any payments. To do this you have to pay PayPal $1.95 (this will be credited to you on your first payment using PayPal) for a membership ID number, confirm an email address, and add a credit card to your account. When this process is completed, you will have no sending limit. If you remove or change a funding source, ebaY may require you to go through the entire process again.

6.3 Refused Payments. unchanged

6.3 Electronic Transfers. Though this clause does say " PayPal will never make transfers from your bank account without your authorization." you have already authorized ebaY to make unapproved withdrawals from your bank account in the case of charge backs any time they feel justified in doing so. (clause 5.1)

7. Your Information and Restricted Activities This section is new and is a conglomerate of bits and pieces of the old agreement.

7.1 Definition. You are responsible for accuracy of your info

7.2 Restricted Activities. This info was mostly in part II 5, 7, 8, 9 of the old agreement under user responsibilities. It states you need to keep your info accurate and updated, that you can't use PayPal for illegal purposes or for gambling unless, "expressly authorized by law in the jurisdiction of both the sender and the recipient of the payment" This is interesting because ebaY said they would not allow the use for gambling period, but they appear to have changed their mind on this.

7.3 License. Irrevocable license but only to perform the functions required to use the site

8. Access and Interference. ebaY added this to PayPal from the ebaY user agreement. You can't use robots etc to extract info from their site without permission.

9. Privacy and Security. ebaY says, " We do not sell or rent your personal information to third parties for marketing purposes without your consent and we only use Your Information as described in the Privacy Policy." This will be as true on PayPal as it has been on the ebaY site - a lie you can count on.

10. Termination or Closing Your Account. You may close your account at any time by clicking the "Close Account" link in your Profile on the PayPal website. In this agreement, as in the old agreement, is the Hotel California clause, where you can check out but never leave. "If you do not access your account for a period of three years, it will be terminated. After the date of termination, we will use the information you provided to try to send you any funds that we are holding in custody for you. If that information is not correct, and we are unable to complete the payment to you, your funds will be subject to applicable state laws regarding escheat of unclaimed property. "

11. Remedies and PayPal's Right to Collect From You. This is a new clause that pulls bits and pieces form several areas of the old agreement, combines them and adds to them. This clause appears to give ebaY the ability to shut your account down, take all your money, and get around to telling you why, when they feel like it. This is of particular concern, since there is no requirement for ebaY to contact you in any certain amount of time, and allows them to take over any PayPal accounts you have or that they think are related to your account, even if those accounts are not in dispute. ebaY claims that this clause of the user agreement is equivalent to your giving them complete consent in advance no matter what the circumstances. " PayPal may consider this Agreement as your consent to PayPal's asserting its security interest or exercising its right of setoff should any law require your consent." As usual with an ebaY "user agreement" the responsibility is all on your side and none on ebaY's. The one saving grace PayPal has had so far, is that there ARE toll free numbers to call to get assistance from a human when things go wrong. The quality of this help is variable, but at least it exists.

12. Assignability. unchanged

13. Legal Compliance. You shall comply with all applicable domestic and international laws, statutes, ordinances, regulations, contracts and applicable licenses regarding your use of our Services.

14. Additional Terms. ebaY has added 12 sections incorporated by reference. All these sections can be changed without notice effective as soon as they are posted. The only policy ebaY has to give prior notice to change is the privacy policy, where a 30 day notice is required.

Privacy Policy (February 7, 2003) Closing Accounts and Limiting Account Access (February 7, 2003) Electronic Fund Transfer Rights and Error Resolution Policy (February 7, 2003) Seller Protection Policy (February 7, 2003) Buyer Complaint Policy (February 7, 2003) Money Back Guarantee Policy (February 7, 2003) Payments (Sending, Receiving, and Withdrawals) Policy (February 7, 2003) Premier and Business Account Policy (February 7, 2003) Fees Policy (February 7, 2003) PayPal Shops Policy (February 7, 2003) Debit Card Policy (February 7, 2003) BillPay Policy (February 7, 2003)

15. Notices. 15.1 Electronic Communications. You agree that the ebaY PayPal Agreement constitutes "a writing signed by You", and you agree to receive all communications from PayPal in electronic form. All communications in either electronic or paper format will be considered to be in "writing," and to have been received no later than five (5) business days after posting or dissemination, whether you actually got it (or saw it) or not.

15.2 Credit Report. You agree to let ebaY PayPal get your credit report. This section says " with the sole purpose of assessing your fitness to hold a PayPal account and/or your ability to use the Service or features thereof." Though in other sections it allows ebaY PayPal to pull your report whenever they want and as frequently as they want.

15.3 Procedure. Despite the fact that ebaY PayPal can send legal notices to you via electronic means, you are required to communicate with ebaY PayPal in writing. Any notices must be sent by postal mail to PayPal Inc., Attn: Legal Department, 303 Bryant Street, Mountain View, California 94041

16. Legal Disputes. This is new and a major change brought about by the courts ruling against PayPal, saying the dispute resolution clause in their user agreement was unenforceable and that users were entitled to take legal action against PayPal. This clause actually appears to give users much flexibility in filing suits or claims against PayPal.

16.1 Arbitration. For claims under $10,000 you or PayPal may elect to use binding arbitration conducted by telephone, on-line, and/or based solely upon written submissions where no in-person appearance is required. Arbitration would be conducted by the American Arbitration Association - http://www.adr.org/index2.1.jsp or JAMS - http://www.jamsadr.com/home.asp or any other established Alternative Dispute Resolution provider mutually agreed upon by the parties.

16.2 Court. Alternatively, any Claim may be adjudicated by a court located in Santa Clara County, CA or where the defendant is located. You and PayPal agree to submit to the personal jurisdiction of the courts located within the county of Santa Clara, California.

16.3 Alternative Dispute Resolution. PayPal will consider use of other alternative forms of dispute resolution, such as binding arbitration to be held in Santa Clara County, California or another location mutually agreed upon by the parties.

16.4 Violations of Section 16. All Claims (excluding requests for injunctive or equitable relief) must be settled through the method selected by the party that filed the claim. If either party files an action contrary to Section 16, the other party may recover attorneys' fees and costs up to $1000.00, provided that the party seeking the award has notified the other party in writing of the improperly filed Claim, and the other party has failed to withdraw the Claim.

17. General. This basically says that ebaY PayPal is responsible for nothing. They wont guarantee site access, uninterrupted service, secure service, or anything else as it might be interfered with factors outside ebaY PayPal's control. You agree that the agreement will remain in force even if ebaY PayPal merges with another company or sells to another company. They say they don't have to be consistent in their enforcement of breeches. They also hold that Sections (3) Fees, (2.4) Release, (8) Access and Interference, (2.6) Limit of Liability, (2.7) Indemnity, and (16) Legal Disputes, survive any termination or expiration of this Agreement.

18. Disclosures. The Services are offered by PayPal Inc., located at 303 Bryant Street, Mountain View, California 94041. Disputes between you and PayPal regarding PayPal's Services may be reported to Customer Support by going to the PayPal Help Center. PayPal encourages you to report all user-to-user disputes to your local law enforcement, postmaster general, or a certified mediation or arbitration entity. Additionally, you may report complaints to the Complaint Assistance Unit of the Division of Consumer Services of the Department of Consumer Affairs by contacting them in writing at 400 R Street, Sacramento, California 95814, or by telephone at (800) 952-5210.