posted on May 17, 2002 02:30:42 PM new
Just got this in the mail Huuuuummmm
It's also been said that the SEC is looking into their filing as to possible fraudulant statements.
PayPal Faces More Lawsuits, Could Lose MasterCard
RELATED SYMBOLS: (PYPL)
May 16, 2002 (NewsFactor.com via COMTEX) -- Two more companies have accused
online payment firm PayPal (Nasdaq: PYPL) of using their technology without
permission, and the company's relationship with MasterCard may be in jeopardy,
PayPal disclosed in its quarterly report.
Loss of MasterCard compatibility would be a significant blow because 15 percent
of all money transferred via the PayPal network during the first quarter was
funded with MasterCard credit cards.
MasterCard Questions
In its filing with the U.S. Securities and Exchange Commission, Pay Pal said
that as of May 1st, MasterCard enacted a rule that could require PayPal's credit
card processing bank to enter into separate agreements with each customer who
regularly uses PayPal to accept payment for goods or services. Many such
customers are eBay (Nasdaq: EBAY) sellers.
"The Company is unable at this time to predict how this amendment will affect
its business, but it could require the Company to change the interrelationship
among itself, its customers and its credit card processing bank in ways that
would increase its costs, reduce the attractiveness of the Company's service or
both," PayPal noted in the filing. "This amendment could also lead to the
Company being unable to continue accepting MasterCard."
Technology Tangles
In addition to its credit card snags, PayPal -- which settled a patent
infringement lawsuit filed by New York-based CertCo just before its successful
IPO in March -- noted that it has been hit with a second suit and may face a
third.
PayPal said it was sued May 7th by Tumbleweed Communications (Nasdaq: TMWD) , a
Redwood City, California-based software firm that alleges PayPal infringed on
two of its patents related to delivery of documents over the Internet.
In its filing, PayPal denied the claims and said it plans to "contest the suit
vigorously."
Another company, NetMoneyIN, has not yet sued but has demanded that PayPal
purchase a license for what it said are two patented technologies for managing
credit and debit payments online. That firm has said it will file suit if PayPal
does not agree to license the technology.
"The Company believes that it does not infringe the patents, among other reasons
because the Company does not provide direct credit or debit card processing for
merchants," PayPal said.
Case Closed
PayPal noted that it settled the earlier CertCo suit by making an
"inconsequential payment" to that firm, which had claimed to be the inventor of
the underlying technology on which PayPal's person-to-person payment network is
built.
Despite that legal stumbling block, which reared its head just hours before
PayPal's Wall Street debut, PayPal stock has traded well above its offering
price of $13. Shares were up early Thursday to $24.02.
PayPal also faces two class-action lawsuits from members who claim the company
was slow in responding to their requests for refunds and thwarted their attempts
to recoup their losses.
Sound Fundamentals
Morningstar.com analyst George Nichols told the E-Commerce Times that PayPal's
long-range outlook remains upbeat, despite the rash of lawsuits and outstanding
regulatory challenges.
"There are a lot of hurdles to clear, but over the long term I expect the firm
to fare well despite regulatory threats and other challenges," Nichols said. "It
still has fantastic fundamentals in terms of growth."
By Keith Regan
URL: http://www.paypal.com
http://www.ebay.com
http://www.tumbleweed.com/en/
http://www.morningstar.com
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