By Parking Today staff
On May 8, the parking payment platform PayByPhone responded to a class action lawsuit filed in February 2026 alleging it deceived customers by initiating parking times before they complete payments. In two concurrent motions, the company asked the court to dismiss the case and compel resolution of the dispute through arbitration. If granted, the motions could end both the individual lawsuit and the possibility of class-wide relief.
‘Unorthodox’ methods alleged
In his lawsuit filed February 11, 2026, in U.S. District Court for the California Northern District, San Francisco Division, San Francisco resident Justin Alicea alleges that PayByPhone’s app begins counting down a parking session’s time from the moment a user selects a duration and not from when they actually complete payment.
According to the complaint, this means a user who spends even a couple of minutes on the payment screen receives less parking time than they paid for. The complaint illustrates this with a screenshot showing that immediately after payment was confirmed, the app displayed only 12 minutes and 24 seconds remaining on a 15-minute session, suggesting roughly 2.5 minutes had already elapsed.
“PayByPhone does not make clear and conspicuous disclosures about its unorthodox method of counting time or charging for parking,” according to the complaint.
The complaint further alleges that PayByPhone has a financial incentive to encourage this outcome, because the company earns a transaction fee for each separate parking session, meaning two short sessions generate more fee revenue than one longer one.
Alicea brings the case as a class action on behalf of PayByPhone users nationwide, and the complaint asserts twelve separate legal claims, including violations of California’s Consumer Legal Remedies Act and Unfair Competition Law, as well as the consumer protection statutes of Florida, Massachusetts, Washington, New Hampshire, Pennsylvania, and New York, plus common law claims for fraud, conversion, unjust enrichment, and money had and received.
The complaint seeks damages, restitution of overpayments, disgorgement of profits, and an injunction requiring PayByPhone to stop the practice. The proposed class is estimated to number at least hundreds of thousands of users. The plaintiff’s counsel did not respond to requests for comment for this story. PayByPhone declined to comment.
‘By common sense and by contract’
On May 8, PayByPhone responded to the lawsuit by filing the two motions rather than answering the suit. In its motion to compel arbitration, PayByPhone argues the case should not be in court at all, because Alicea failed to follow the provisions of the terms and conditions that he agreed to upon undertaking the transaction.
The plaintiff “expressly agreed to submit all claims against PayByPhone for resolution in binding arbitration on an individual basis, but only AFTER he first participated in an informal dispute resolution process with PayByPhone’s Customer Support Center” (emphasis in original), according to the motion to compel arbitration. “Plaintiff failed to follow the terms of his agreement with PayByPhone, necessitating this motion.”
In its motion to dismiss the case, PayByPhone contends the entire fraud theory collapses under scrutiny. The company argues that its app clearly displays an exact expiration time on the payment screen before a user clicks “pay,” giving users precisely the session they requested, according to the motion.
PayByPhone further argues that users are supposed to already be parked when they use the app, both as a matter of common sense and per the terms, which explicitly state that users “only activate the Services after you have found an available and valid parking space,” according to the motion to dismiss. Using the app while still driving or searching for a spot, PayByPhone notes in the motion, would be unsafe and illegal.
The company maintains that Alicea’s lawsuit rests on the “surprising notion that it is deceptive to charge someone for parking time when their vehicle is — by common sense and by contract — already parked in the space for which the person is being charged,” according to the motion to dismiss.
On top of the fraud arguments, PayByPhone challenges the plaintiff’s claims related to the California Unfair Competition Law for failing to plead inadequate legal remedies, contests the plaintiff’s standing to seek injunctive relief since he alleges no future harm, argues that the unjust enrichment and conversion claims are barred by the existence of a governing contract, and moves to strike the class allegations entirely, according to the motion to dismiss.
Judge William H. Orrick, the judge presiding over the case of Justin Alicea v. PayByPhone US Inc. (a Delaware corporation) and PayByPhone Technologies Inc. (a Canadian corporation), has indicated that he will hold a Zoom hearing on August 5 to hear the two motions from PayByPhone.
