PayPal Under Scrutiny Over False Growth Claims and Fraud Vulnerabilities

NEW YORK, February 3, 2025 – A prominent investor rights law firm, Bragar Eagel & Squire, P.C., has initiated an investigation into possible claims against PayPal Holdings, Inc. (NASDAQ: PYPL). This follows a lawsuit filed in October 2022, alleging that the company misled investors regarding the growth of its Net New Active Accounts (NNAs).

Class Action Complaint Details Allegations

The lawsuit claims that PayPal emphasized high growth in its NNA metric during the Class Period from February 3, 2021, to February 1, 2022. However, investors were unaware of the widespread fraud through the company’s cash incentives for creating new accounts.

Discrepancy Between Reported and Actual Data

PayPal’s cash incentive campaigns, designed to boost account growth, inadvertently attracted bots and fake accounts. The law firm asserts that the company failed to disclose this fraud, leading to inaccurate metrics.

According to the lawsuit, these campaigns increased PayPal’s vulnerability to bot farms, which created millions of illegitimate accounts using PayPal’s $10.00 account opening offer. These fake accounts yielded no revenue for PayPal and were not real users, but the company did not inform investors about this issue.

Keeping Inactive Accounts to Meet Projections

The lawsuit further claims that PayPal concealed its strategy of maintaining inactive customers and fake accounts on its platform. This was done to artificially inflate NNA figures and meet quarterly projections, giving investors an inflated view of the company’s actual user base.

PayPal Revealed the Miscalculation

On February 1, 2022, PayPal disclosed that its NNAs for 2021 totaled only 49 million, short of the 50 million it had initially projected in February 2021. PayPal acknowledged that approximately 4.5 million accounts were likely created fraudulently through its incentive campaigns.

In response to this revelation, PayPal adjusted its customer acquisition strategies for the fourth quarter and issued revised projections for 2022, anticipated to be between 15-20 million net new customer accounts. PayPal also re-evaluated its long-term goal, stating that the 750 million account aspiration was no longer realistic.

Stock Price Impact

Following these disclosures, PayPal’s stock price plummeted by around 25%, causing significant financial losses to investors.

Long-Term Stockholders Invited to Participate

Long-term PayPal stockholders who believe they have been affected by these practices, or those with additional information, are encouraged to contact Bragar Eagel & Squire, P.C. for further details.

To learn more about the investigation or to inquire about your rights as an investor, you can reach out via email at [email protected] or by telephone at (212) 355-4648. You may also submit your information through this contact form. There is no cost or obligation involved in participating.

About Bragar Eagel & Squire, P.C.

Bragar Eagel & Squire, P.C., based in New York, California, and South Carolina, specializes in representing individual and institutional investors in complex litigation related to securities, derivatives, and commercial disputes. The firm operates in both state and federal courts nationwide, advocating for investor rights.

For additional information on the law firm’s services, visit www.bespc.com. Note: This information serves as attorney advertising. Previous outcomes do not guarantee similar results.

Contact Information

Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
www.bespc.com

What This Means for PayPal Investors

This investigation highlights the importance of transparency in how companies report their growth metrics. Investors are advised to stay vigilant and seek legal advice to understand how such revelations could impact their investments.

Conclusion

The potential breach of fiduciary duty by PayPal’s board of directors and the misrepresentation of growth metrics raise serious concerns for long-term stockholders. The investigation seeks to uncover the full extent of these issues and ensure investors receive just compensation.

If you are a PayPal investor and believe you have been misled, Bragar Eagel & Squire, P.C. can provide the legal guidance you need. Contacting the law firm is a straightforward process with no upfront costs or obligations.

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