How to Sue PayPal

Do you have a dispute with PayPal over damaged luggage, a flight refund, or an overbooked flight? You have several options, including suing PayPal in small claims court.

In this article, learn about:

• Common types of small claims lawsuits against PayPal.

• What to do before suing PayPal in small claims court.

• How much does it cost to sue PayPal in small claims?

• How much can you sue PayPal for in small claims?

• How to file a small claims lawsuit against PayPal.

• Fun fact, lawyers are not allowed at the initial small claims hearing! This is to even the playing field so that each party has an equal chance of obtaining justice.

We often receive the question, can I sue PayPal in small claims? The answer is yes as long as the dispute is for $12,500 or less (more on this below).

Here are some examples of small claims lawsuits against PayPal:

• PayPal does not release your funds

• PayPal never gave you a refund

• PayPal overcharged you

Contact PayPal Customer Service

Call PayPal's customer service phone number +1 (402) 935-7733 and have them troubleshoot your problem.

Contact PayPal on Twitter

Many companies respond to PayPal complaints extremely fast. Here is PayPal's Twitter handle:@PayPal

Consider filing a complaint with the BBB against PayPal

The Better Business Bureau may be able to help you with your complaint against PayPal. Here is how you can file a BBB complaint against PayPal.

Make sure to also review complaints other customers have filed against PayPal with the BBB (review PayPal's BBB complaints here). This will help you learn whether PayPal responds to BBB complaints.

Consider using PayPal's Resolution Center

Use PayPal's Resolution Center by logging in and going to the Resolution Center option. More information can be found here.

Send a Demand Letter

A demand letter is a letter that outlines a set of requests. For example, you could request a refund and explain why you are requesting a refund.  

If you eventually decide to sue in California small claims court, you are required to first request your money or property back before you can file the lawsuit. While you can request your money or property back orally, it is recommended you do so in writing in the form of a demand letter.

What to include in the demand letter?

Unsure of what to include in your demand letter to PayPal:

• How much money you are owed.

• Why you are owed money.

• Your contact information.

• Where to send payment.

• Give them a few days to respond (usually about 7 to 14 days).

• State that if they don't respond, you intend to sue.

Where to mail the demand letter to?

PayPal
2211 N 1st St
San Jose, CA 95131-2021‍

You can also mail a copy of the letter to PayPal's agent in California:

CT Corporation System
818 West Seventh Street, Suite 930
Los Angeles, CA 90017

Make sure to always verify this information by reviewing the California Secretary of State's website as this information may change. Learn how here.

If PayPal ignores your demand letter, what is the next step? You may be able to sue PayPal in a small claims court. Make sure to review any contracts you have received from PayPal (here is the contract of carriage for PayPal, make sure it applies to you). While there may be a forced arbitration clause, many times there is an exception for small claims lawsuits.

So how much are you going to spend by suing PayPal in small claims court?

Court Filing Fees

The amount you will pay to file a small claims lawsuit in California depends on how much you are suing PayPal for. You will pay between $30 to $75 to file the lawsuit. If you cannot afford to pay court fees, you can ask the court to waive the fees.  

Serving Costs

Once the lawsuit is filed, you have to notify PayPal that you have sued them. This is called "serving." Serving Costs can range from $0-$75.

More on who to serve on behalf of PayPal below. ‍If you win, you can request that PayPal pay for your court fees and serving costs.

In California, you can sue PayPal for a maximum of $12,500 if you are an individual. If you are a business suing PayPal, you can sue for a maximum of $6,250. Note, if you are a sole proprietor, you count as an individual.

By suing in small claims you are agreeing to waive any amount over the maximum amount you can sue for, even if you are owed more. For example, if PayPal owes you $14,000, and you decide to sue in small claims, you are waiving suing for an additional $1,500. Meaning that you will win a maximum of $12,500.

While you may be missing out on the full amount you are owed, there are practical benefits to suing in small claims instead of suing in "regular court."

Here are some of the benefits:

1. Court filing fees are cheaper in small claims than in other courts.

2. The process is faster in small claims than in other courts as your hearing will usually be scheduled 30-70 days after you file the lawsuit.

3. Lawyers are generally not allowed in small claims which helps keep the costs of suing low.  

Step 1: Complete "Plaintiff's Claim and Order to Go to Small Claims Court" (Form SC-100)

• This form starts the California Small Claims Court lawsuit process. Download here.

• It is also known as the "complaint" or "claim."

• Remember, we can help you prepare the small claims lawsuit and file it with the court! 

• Here is the information you will need for the lawsuit:

Find the correct legal entity for PayPal that you purchased your ticket from.

It may be the following entity:

PayPal
2211 N 1st St
San Jose, CA 95131-2021‍

PayPal's agent for service of process in California:

CT Corporation System
818 West Seventh Street, Suite 930
Los Angeles, CA 90017

Make sure to always verify this information by reviewing the California Secretary of State's website as this information may change. Learn how here.

Step 2: File "Plaintiff's Claim and Order to Go to Small Claims Court"

Each California Small Claims Court has a different procedure for filing. You have to check with your local small claims court whether they allow filing in-person, by mail, online, or by fax. Or we can file your case for you!

Step 3: Serve the lawsuit on PayPal's agent

Remember, you will be serving PayPal's agent for service of process" as listed on the California Secretary of State's website. Learn more here.

Agent for Service of Process:

CT Corporation System
818 West Seventh Street, Suite 930
Los Angeles, CA 90017

Make sure to always verify this information by reviewing the California Secretary of State's website as this information may change. Learn how here.‍

Small claims hearings in California small claims are informal and most hearings last around 15 minutes. While many disputes settle before the hearing, here is what to expect if your lawsuit does not settle.

Who will represent PayPal at the hearing?

• The easiest way to answer this question is that a lawyer will not be representing PayPal since lawyers cannot represent parties at the initial small claims hearing. They will have a non-attorney representative.

The hearing:

• Right before the hearing, the judge will ask you and PayPal's representative to show each other the evidence that you will later show the judge.

• The judge will ask you why you are suing.

• The judge will ask PayPal's representative to tell them their side of the story.‍

• The hearing will last around 15 minutes.‍

• The judge will ask you to show them the evidence you brought. Sometimes the judge will keep the evidence. Other times, you will get the evidence right back.

• Very rarely a judge will tell you whether you won or lost at the hearing. Instead, the judge will tell you that their decision will be mailed to you (usually takes a few weeks to two months or so).