Class Action-

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7^th Circuit Court of Appeals

Case Name: Terry Kass v. PayPal Inc.

Case No.: 22-2575

Officials: Rovner, Hamilton, and Scudder, Circuit Judges.

Focus: Class Action-

PayPal offers the option to donate to charities through the Giving Fund, a 501(c)(3) charitable organization operated by PayPal. Kass opened a PayPal account and agreed to the User Agreement in 2004, which included an optional arbitration clause and allowed PayPal to make changes to the Agreement by posting them on their website. In 2012, PayPal made an amendment to the Agreement, making arbitration mandatory. Until December 2012, users had the choice to opt-out of this provision. In 2016, PayPal sent Kass emails encouraging her to make year-end donations, and she donated $3,250 to 13 charities through the Giving Fund website. Later, Kass discovered that only three charities received her donations, and none of them were aware of her contributions. Kass alleges that the Giving Fund only transferred funds to charities with a PayPal “business” account and “redistributed” donations to similar charities if the recipient charity did not have such an account.

Subsequently, Kass, along with a charity she had donated to, initiated a class action lawsuit. The district court initially compelled arbitration, and the arbitrator ruled in favor of the defendants. However, the Seventh Circuit vacated the decision. The district court made an error by deciding a disputed factual issue that should have been determined by a fact-finder: whether Kass had received notice of the amended Agreement and implicitly agreed to the new arbitration clause.

Vacated, Remanded.

Decided 07/27/23

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