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Application security programs and practises

PayPal sent a long email to its US customers this week with details about how to get a piece of the $9.25m settlement fund the lawyers have created. It is possible to get a chunk of it even if you have no specific complaint related to the lawsuit.

PayPal sent the notice to anyone who opened an account in the US between October 1, 1999 and January 31, 2004. They will also publish the notice in three media outlets: USA Today and Newsweek and People magazines.

The lawsuit, filed by attorneys at Jacoby & Meyers law firm shortly after PayPal's IPO on February 14, 2002, claims that PayPal illegally restricted customers' access to the funds in their accounts and did not provide proper account statements, both in violation of the Electronic Fund Transfer Act (EFTA).

PayPal claims that EFTA rules do not apply to its business.

Throughout the notice, PayPal repeatedly denies any wrongdoing in the case, clearly stating that the creation of this settlement fund in no way should be taken as an admission of guilt. In fact, the court did not reach a verdict in the case, but simply sent it to mediation, where the parties agreed to settle out of court.

Account holders must have opened a PayPal account between October 1, 1999 and January 31, 2004. They may not reside in the following countries: Austria, Belgium, Denmark, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, The Netherlands, or United Kingdom. And of course, they must not be employees or former employees of PayPal.

There are two types of claims to be filed in the settlement. Dispute Resolution Claimants are those who believe that before February 1, 2004 they had access to their account improperly restricted as the result of an unauthorized or incorrect funds transfer. These claimants can file a short form to receive a flat payment of $50, or a long form, which will be evaluated by a claims administrator in order to determine payment.

Statutory Damage Fund Claimants don't have to have had a complaint related to the lawsuit. They simply need to fill out an online form with account and identification information, releasing PayPal from future liability in the lawsuit or future, similar complaints. Statutory Damage Fund Claimants will share in a $1 million chunk of the total fund, and the proceeds will be divided among all who file claims.

More information about the settlement, including online claim forms, can be found here. ®

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