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News reports late Thursday said newly public online payment company PayPal Inc. was served on Wednesday with a class action suit, charging the company with shoddy customer service and improper administration of users accounts. Attorneys from the New York law firm Jacoby and Myers, which allegedly filed the class action against PayPal, could not be reached for comment. PayPal’s spokesman said he could not comment on the suit because his company is in the midst of a post-IPO quiet period. According to MSNBC, one of the two plaintiffs named in the suit is Lanskoi Kirill, who maintained a $30,000 account with PayPal and found it frozen this year when he tried to withdraw his funds. The news comes one week after PayPal, which provides a payment option to users of online auctioneer eBay, wowed investors with one of the first Internet IPOs in a year. Palo Alto, Calif.-based PayPal raised $70.2 million in its Feb. 14 Wall Street debut. The three-year old company originally planned to go public Feb. 7, but delayed the filing after it came to light that online security company CertCo Inc. of New York filed suit against PayPal in the U.S. District Court of Delaware. CertCo claims PayPal infringed on its 2000 patent by providing electronic payment services for online auction systems. PayPal denies Certco’s claims. State regulators also are allegedly investigating PayPal, inquiring whether the company is more of a bank than an online service, thereby requiring licenses in states where it transmits money. Louisiana earlier this month asked the company to stop doing business until it acquires the proper license. Numerous anti-PayPal Web sites, like PayPalWarning.com, have surfaced recently, hoping to warn the company’s customers about potential fraud, lousy customer service and frozen accounts. “Paypal has every right to temporarily hold on to a transaction if they suspect fraud. But define temporary? How would you like it if your paycheck was frozen for four weeks without explanation?” read a Feb. 21 posting on PayPalWarning.com. PayPal, which as of Dec. 31, 2001, managed 12.8 million accounts, faces competition from Citigroup Inc.’s C2it, which has about 250,000 customers, and Billpoint Inc., previously owned by Wells Fargo & Co. and eBay Inc. of San Jose, Calif. EBay, PayPal’s largest client, repurchased Wells Fargo’s 35 percent equity stake in Billpoint for $43.5 million on Feb. 21. Copyright (c)2002 TDD, LLC. All rights reserved.

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