PayPal's Arbitration Clause Not Enforced By Federal Court

September 16, 2002

The United States District Court for the Northern District of California has refused to enforce an arbitration clause in the user agreement of PayPal (the online billing/payment site) as against several class action plaintiffs. The clause, set up as a click-through agreement, called for ‘single arbitration’ of disputes between users and PayPal. This decision illustrates how courts are not treating click-through agreements with uniformity, in light of last week’s decision by a District of Columbia court upholding a similar clause for Verizon (which was the subject of last week’s Update). For more details on the PayPay decision, click on: