PayPal swats away anti-trust challenge

PayPal succeeded in swatting down anti-trust claims challenging what a class of consumers characterized as anti-steering rules that apply to merchant payment acceptance fees. A decision handed down by Judge Jeffrey White of U.S. District Court for the Northern District of California did not address the fees PayPal charges merchants, rather it was the correlation between those fees and the prices consumers pay for merchants' goods and services that the court found lacking.

The Aug. 12, 2026, decision granted PayPal's motion to dismiss the case, asserting that the class of consumers suing it had failed to provide sufficient facts to back up their claim that PayPal had run afoul of the federal Sherman Anti-Trust Act.

The case, Sabol v, PayPal Holdings, Inc., attacked provisions of PayPal's merchant agreements that prevent merchants from surcharging PayPal transactions or steering customers to lower-cost payment methods.

The complaint, originally filed in 2023, asserted that because merchants couldn't steer customers to lower-cost payment methods, PayPal faced less pressure to lower fees. And faced with high payment acceptance costs merchants charged more for their products and services.

If at first you don't succeed …

The judge dismissed the case in 2024, explaining that the plaintiffs needed to prove they were directly affected by PayPal's fees. But he gave them permission to amend their complaint. After amending the complaint, however, the plaintiffs still failed to prove their point. The judge, in 2025, again gave them an opportunity to amend their complaint, and again found problems with the consumers' claims of anti-trust standing.

Basically, the judge said that the alleged relationship between PayPal's rules, merchant payment costs and the prices consumers pay were too speculative and indirect.

"A plaintiffs obligation to provide the grounds of their entitlement to relief requires more than labels and conclusions," the judge wrote in the Aug. 12 ruling. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."

The judge concluded that the consumers' "allegations were insufficient to allege antitrust standing because they failed to allege facts that explain the significance of the passed on transaction fees relative to other numerous factors for any goods or services plaintiffs allegedly purchased."

The inference being that a lawsuit brought by merchants regarding PayPal's supposed anti-steering rules might have a different outcome.

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