PayPal Sued for Freezing Account of CBD Products Seller

On Monday/, Friends NYC, Emma Kadar-Penner and Mary Meyer filed a complaint in the Eastern District of New York against PayPal Holdings Inc. for allegedly locking their business’ account and withholding money from them, allegedly because they sold CBD products.

According to the filing, the plaintiffs opened a PayPal account in 2012, which they used as a third party vendor to collect payment for the sale of their products, which included home goods, gifts, and clothing. According to the complaint, Friends NYC expanded their product line and began to include CBD products that contained oil with 0-3% THC.

The plaintiffs alleged that on December 2, 2020, PayPal sent them a message stating that “both their business and personal accounts were locked, that Plaintiffs were permanently barred from transacting any business sales with [PayPal].” Furthermore, a hold of $9,000 was placed on their account. PayPal supposedly told them they would need 6 months to investigate, but they “were given no information as to the cause for a 6 month period.”

According to the 2018 Hemp Farm Act, “no State … shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946,” and cannabis and low derivations of THC (such as CBD products) were removed from the definition of marijuana in the Controlled Substances Act, making it legal to transport and sell in New York. 

To make matters worse, the plaintiffs claimed that they were never given any updates and were charged $3,958.01 as “damages” on May 20th, 2021. On June 11th, PayPal permanently locked their account for “sale of narcotics.” As a result, the plaintiffs are suing on the counts of breach of contract, interference of possession of bank accounts and deprivation of property without due process. 

Friends NYC are seeking 9% interest for the $9000 hold on their account, damages in the amount of $3958.01 plus interest, punitive damages, attorney’s fees and costs of no less than $100,000 and other relief.

The plaintiffs are represented by Gouchev Law.