We already told you that perennial Worst Company In America heavyweight PayPal added a clause to its user agreement that forces customers with legal complaints into mandatory binding arbitration and takes away their right to band together in a class action. You can opt out of the clause by sending a very specifically formatted letter; luckily there’s now a template.

We’ve heard from some readers that their opt-out letters were rejected because they were not formatted properly, which is why the folks at Public Citizen have put together a fill-in-the-blank template for PayPal customers who still want to retain their right to pursue a proper legal action against a company.

CLICK HERE to download a Word document that you can fill out, print and mail to the following address:

PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

Remember that the deadline for mailing the letter is Dec. 1, 2012. New customers have 30 days from when they register with PayPal.

For those who want to create their own document or are having trouble with the linked template, here is the text of the letter:

[DATE]

PayPal, Inc.
Attn: Litigation Department
2211 North First Street
San Jose, CA 95131

Re: Opt-out Notice

To Whom It May Concern:

I do not agree to the Agreement to Arbitrate. By this letter, I am opting out of the Agreement to Arbitrate, including the prohibition on class actions, as authorized by paragraph 14.3.e of the PayPal User Agreement. This opt-out applies to the following PayPal accounts:

Email(s):
[list the email address(es) associated with your PayPal account(s)]

Sincerely,

[sign here]

YOUR NAME
YOUR ADDRESS
YOUR TELEPHONE NUMBER

We’ll take this time to remind y’all the PayPal’s parent company eBay recently added a similar arbitration clause and that you only have until Nov. 9 to opt out of that agreement. Templates [PDF and Word] for eBay opt-out letters are also available.

Some readers have asked us why it’s so important to fight these arbitration clauses. In short, it’s because they sway the balance of power strongly in the direction of the companies that use forced arbitration.

Class-action suits give consumers leverage by allowing all effected customers to consolidate their claim. Once a class action has been established, an effected customer need only prove that they are part of the class.

Forced arbitration takes away the power-in-numbers impact of a class-action suit by compelling each effected customer to slog through a complicated arbitration process. This has the net result of dissuading hurt consumers by putting up a roadblock in front of each and every single one of them.

So tell PayPal and eBay that you won’t be taken advantage of, and take advantage of the opportunity to opt out of forced arbitration.

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