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Paypal Faces Civil RICO Lawsuit For Freezing Customer Accounts


According to a report from Bloomberg, Paypal—the large multinational financial technology company—is facing a civil RICO lawsuit. The claim alleges that the company’s “freezing” of certain customer accounts amounts to racketeering activity. In this blog post, our Miami RICO claims lawyers provide a more detailed overview of the allegations raised against Paypal and explain the standard of liability in a civil RICO lawsuit.

Allegations: Paypal Improperly Froze Customer Funds Without Any Explanation 

Paypal’s main headquarters are in Palo Alto, California. The Silicon Valley-based financial services firm is facing a federal civil RICO lawsuit in the United States District Court of the Northern District of California. The claim in questions also alleges other violations, including violations of federal financial statutes and state-level consumer protection statutes. The three plaintiffs named in the lawsuit state that they have collectively had more than $240,000 in funds frozen by Paypal. They raise two primary points of contention in their civil legal claim:

  1. Paypal has frozen their funds without justification—thereby amounting to a form of illegal conversion (theft); and
  2. Paypal has failed to provide any notice or explanation as to why it is refusing to release the funds in question.

For its part, Paypal told reporters that it will not offer a public comment on the matter as litigation is still pending. However, the company’s representatives stated that there will be a response in the appropriate legal forum. 

Civil RICO Liability: A High Standard 

Plaintiffs face a high bar in proving liability in a civil RICO lawsuit. Courts have emphasized time after time that proving a defendant committed fraud (or engaged in other misconduct) is not sufficient to establish a civil RICO violation. There are specific elements that must be satisfied in a civil RICO case. To prove a federal civil RICO violation, plaintiffs must meet the following three elements:

  1. The defendant acted as part of an enterprise designed to carry out fraudulent conduct (racketeering activity);
  2. There was a pattern of racketeering activity used to defraud the victims; and
  3. Actual financial harm was sustained as a consequence of the defendant’s racketeering activity.

Florida has its own similar state-level civil RICO law in place. For plaintiffs, there are advantages to pursuing a civil RICO lawsuit despite its heightened standard of liability. Through a successful civil RICO action, a plaintiff can seek treble damages—meaning you can recover financial compensation valued at three times the value of actual losses.

Schedule a Confidential Consultation With a Florida Civil RICO Attorney Today

At Pike & Lustig, LLP, our Florida commercial law attorneys represent both plaintiffs and defendants in federal and state civil RICO litigation. If you have questions about your rights and your options, we are available to help. Call us now or get in touch with us online to arrange a fully private assessment of your case. Our law firm provides civil RICO representation throughout the region, including in Miami, Miami Beach, Coral Gables, Fort Lauderdale, West Palm Beach, and Jupiter.



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