EBay Settles Suit by PayPal Customers

EBay Inc., the world’s largest online auctioneer, agreed to pay $9.25 million to settle a 2002 class-action lawsuit by customers who alleged its PayPal e-mail payment service ignored complaints or didn’t respond to inquiries in a timely fashion.

EBay, which bought PayPal after the lawsuit was filed, set aside funds last year to pay for a settlement, the San Jose company said.

PayPal customers had alleged the company wasn’t responding to some complaints, including those from customers whose accounts were frozen. The settlement would resolve the federal suit as well as one pending in a California state court, said attorney Daniel Girard, who helped represent the plaintiffs.

The settlement must be approved by a U.S. district court in San Jose. It covers PayPal users who had accounts from Oct. 1, 1999, to Jan. 31, 2004, PayPal spokeswoman Amanda Pires said.

EBay shares fell $1.79 to $85.62 on Nasdaq.