eBay Merchant to Sue PayPal for its Anti-Bitcoin Policies

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Update: Seems there’s some fishiness going on about this whole deal. http://www.reddit.com/r/Bitcoin/comments/1uw282/before_we_get_too_excited_about_the_ebay_merchant/

PayPal is known for being antagonistic towards Bitcoin. The company is known to “sever business relationships” with people who sell Bitcoin products (specifically miners) on eBay, the company that owns PayPal. It doesn’t really seem fair for PayPal to block people from selling Bitcoin mining gear. After all, Bitcoin miners are just specialised computers, and there’s nothing illegal or prohibited in eBay’s terms of service about selling computers. But since Bitcoin threaten’s PayPal’s entire business, it seems a logical (though anti-competitive) move on PayPal’s part.

However, one eBay merchant who goes by the username TerraHasher on Bitcointalk.org has had enough of PayPal’s anti-Bitcoin stance. PayPal has repeatedly frozen his account for selling Bitcoin products on eBay. His plan is to take the online payments company to court.

“I finally got a judge to allow me to file a lawsuit against PayPal, and after complying with the judges request that we send a letter of intent to sue them this week and giving them 2 weeks to reply or resolve the issues. We will be allowed to file a 4 MILLION dollar lawsuit against paypal…

after going from customer service rep, to supervisor, to specialist, to team lead, then finally to manager over  the course of 1 hour 30 minutes with nobody giving me any real information. I HIT GOLD, the manager states, your selling bitcoin. i politely reply, ‘no sir, i am not, that is against paypals rules, i am selling specialized hardware which is like a computer but designed for one purpose, and that is hashing on a SHA- 256 encrypted network.’ He replies back, well it’s all the same and bitcoin is direct competition with paypal’s  business model therefore we do not condone, anything bitcoin related.

The PayPal representative outright stated that they do not like Bitcoin because it competes with PayPal. Terra’s account was repeatedly frozen and unfrozen until he finally decided to get his lawyers involved.

“By wednesday afternoon [January 1] my legal team says O.K. this is where we step in, a company cannot hold peoples money hostage because they dont like bitcoin. And the battle begins, their paralegals transcribe every phone call, copy every e-mail print every screen shot, copy hundreds of complaints from srew-paypal.com and paypal sucks.com. The start blasting it everywhere, writing senators, congress people, filing complaints with the DOJ, the FTC, the IC3, the NW3C everybody pretty much, at the same time the file a petition with the court for a ruling on letting us Sue them in court…

…[the judge] then turns his phone around and it is flashing the number 34 on it, as in 34 voice mails. He says ‘you sure know how to ruin a mans weekend, i dont know who you talked to, but i want to see all of you in my courtroom on monday morning and i will rule on your petition…’

This morning we arrive 30 minutes early at the court house and the room had like 15 people in it. The judge comes in, sits down, and says ‘Send them a letter of intent to sue, request that they reply within 2 weeks, if they do not resolve the issue, or reply, i will see this case in my courtroom.’ “

This story is ongoing and it’ll be interesting to see how it unfolds. Personally, I’m rooting for Terra. PayPal has unjustly punished too many of its users in the past and it’s time for a change.

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9 Responses

  1. EbayPaypalScrewed

    This is great. I sold a bunch of LTC on Ebay during the parabolic blow out when the premiums were tremendous. Ebay cancelled my auctions then charged me final value fees. Called up customer service and the rep said charges would be reversed because the sales were not consummated. Of course they were not. $240 down the drain. Screw Paypal. Screw Ebay.

    • Sheldon

      A lot of chargebacks with anything bitcoin/litecoin related when buyer pays with credit cards.

      So its only reasonable that ebay/paypal wants no business in selling them

      Yes BitCoins is a competitor to PayPal, so its their choice if they allow it, also with BitCoins and PayPal, it would make it too easy to hack+empty someones account, especially since bitcoins is not reversible. And for selling bitcoins with paypal transactions, this is a no no since chargebacks ca happen and once again bitcoins are not reversible.

      Crooks are after mining gear and bitcoinds big time, and these tend to be expensive items, so crooks go after things they can gain the most from, and/or thing they can easily flog. Also crooks like bitcoins as there is many exchanges all over the world making it easy to cash out anywhere, or spend the bitcoins on drugs on bad sites. So crooks will target bitcoins, and continue to get away with it due to the unreversible nature.

      Anyways, 10 Million dollars is a bit greedy. I completely understand ebays/Paypals position, It will improve one PayPal has a good escrow service to help facilitate digital good transfers. PayPal doesn’t like working with things that are non-reversible. Paypal has to also cooperate with Visa/Mastercard in order to retain their good rate threw chase payments, so they have no choice. Also any funds that customers upload if credit card based can be chage back, and paypal hates that, and if PayPal easily allowed purchase of bitcoins, them more hackers would try to hack PayPal to hijack accounts to make purchases and PayPal doesn’t want that too. And if you thing about it, one PayPal allows bitcoins, its opens up a whole new ball game for book keeping, makes things complicated, especially when you don’t know the governments stance on things.

      Too many crooks are targeting bitcoins.

      I been a visa/mastercard merchant for years and chargebacks scare the crap out of me, selling on ebay scares me too, and selling online on my website scares me,, then again I would never pay a merchant with only bitcoins since nothing keeps the merchant honest so its a catch 22.

      • EbayPaypalScrewed

        Perhaps I was targeted because some of my listings had titles saying there was a discount if paid in bitcoin. I agree there are lots of crooks on Ebay and Ebay does not do enough to protect sellers. That is why some of my listings did not allow paypal payment and others did. The listings that allowed paypal payments were a risk I felt was worth taking as I could buy LTC for $6-$8 and sell for $20-$24 on that day. I did, however, take other measures to limit risk on the paypal transactions.

        Crooks target crypto. That is true, but Ebay has no real way of verifying that any transaction is consummated. For example: I send a trinket to a buyer and the buyer says the item was never in the shipping box or, if return is possible, the buyer sends back a box of rocks and claims the refund. When it is sent to the Ebay arbitrator the resolution is invariably in the buyer/ scammer’s favor. At least with crypto there is a blockchain technology that could potentially prove delivery.

        Ebay can get nasty all it wants. Paypal’s days as an important business entity are numbered.

        Ebay is a joke. Paypal is a joke. Where can I join a class action suit?

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