PayPal permanently limited my account

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Jun 3, 2018
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#1
i have been selling on ebay and using paypal for nearly 2 years and only had 2 negitive remarks. within the past 6 months i opened an online store using a dropship wholesale company. After a few months of fine tuning and using google and bing advertising media i started to get sales. Unfortunatly i grew to fast and with no explaination paypal permanatley limited my account and the account of my wife and is holding nearly $8000 hostage for 6 months. They did this 4 days before we were to get married. Since then i have had only one charge back and was under paypals seller protection policy. every order that i fulfilled was processed the exact same way with all the supporting documents on file with paypal.I still have not been told the reason why this action was taken. I received two phone calls from PayPal’s risk management department asking specific questions about my business which I answered in depth. After each call I asked if they needed anymore information and was told “no” both times and that everything was fine. The second person even congratulated me and sent me information to help in the growth of my business. 20 minutes later I get a third call permanently limiting my account with no explanation except for some canned generic explanation about PayPal not supporting my business model. I see no reason for what the have done. they have cost me and my wife unnecessary hardship and has ruined my hopes of a business by doing this. i have emailed every executive that i can come up with and not one has retuned any type of corrosponence. I dont know what else to do but i do know they should not be allowed to do this. i hear they do this often and have been sued in court for such practices. Any help would be appreciated. Thank you. Date of limitation 4.10.2018 I have attached my letter to paypal which includes the only email i recieved from paypal on this matter. i tried to attach this but couldnt for some reason so here it is. the letter i sent to paypal:

Re: Case ID Number: (removed)


I am respectfully requesting that the hold on my funds/account be lifted. I am not necessarily requesting that my account be re-opened or allowed to continue to use the PayPal service, as I have already taken my business to your largest competitor and I am no longer in need of PayPal’s services.

I still have not been told the reason why this action was taken. I received two phone calls from PayPal’s risk management department asking specific questions about my business which I answered in depth. After each call I asked if they needed anymore information and was told “no” both times and that everything was fine. The second person even congratulated me and sent me information to help in the growth of my business. 20 minutes later I get a third call permanently limiting my account with no explanation except for some canned generic explanation about PayPal not supporting my business model. Here is the first and only email I received from PayPal:

“----------------------------------------------------------------------
There's an issue with your account
----------------------------------------------------------------------
Hello James xxxx,

We recently noticed an issue with your account.
What's the problem?
We need some more information about some of your recent sales.
Case ID Number: (remove)
Because of this issue, your account has been permanently limited. We understand this may be frustrating and inconvenient but you'll still be able to see your transaction history for a limited time.
You can get more details about your account limitation in the Resolution Center. For more information, please contact us and we'll do our best to help.
You'll be able to withdraw money from your account within 180 days. We'll email you when it's available. We just want to make sure that you have money in your account to cover any payment reversals.

I still have yet to receive any chargebacks or complaints on my recent sales. I have previously requested a review/appeal of my case which was denied. Although I still disagree with the decision to deny my appeal I will abide by it – however because I feel that holding my funds for 180 days for a non-specified violation of PayPal’s Acceptable Use Policy is excessive, and perhaps a punitive abuse of power, I will be filing complaints with the
following agencies on Wednesday morning, May 09, 2018 if I am not satisfied with PayPal’s response to this request to release my funds:

(agencies in the states that I reside or have a business presence in)

The Michigan State Office of the Attorney General
https://secure.ag.state.mi.us/complaints/consumer.aspx
https://www.michigan.gov/treasury/0,4679,7-121-1773-42077--,00.html

The California Office of the Attorney General
https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

The Arizona Office of the Attorney General
https://www.azag.gov/complaints/consumer


Additionally:
The United States Federal Reserve
https://federalreserveconsumerhelp.gov/about/consumer-complaint.cfm

(I understand that PayPal does not operate as a “bank” which is precisely why they may be

interested in such complaints)

The Better Business Bureau:
https://www.bbb.org/consumer-complaints/file-a-complaint/get-started


All complaints will be filed “online” Wednesday morning, May 09, 2018 and written copies will also be sent via certified postal mail. I understand PayPal’s need for holding funds for credit card chargeback purposes, however
a review of my account history for the last year will reveal a very low chargeback rate as well as a very high customer-satisfaction rate. I feel that any reasonable person would conclude that holding my entire balance for 180 days is excessive and may be viewed by some as punitive or as already stated, an unnecessary abuse of power and perhaps even contrary to the laws of some states. That being said I have no problem with, and agree to leaving a balance of $1500 for credit card chargeback purposes for the duration of the 180 days. I feel that this is a fair resolution while still leaving PayPal with the means to charge back any future credit card disputes to my account.

Please be aware that replying with the standard “this is part of the terms of service that you agreed to” will not satisfy my request, or deter me from filing my complaints with the agencies listed above on the morning of Wednesday, May 09, 2018. It will be up to those agencies to determine if PayPal is operating within the law, abusing power, etc. I am simply seeking a resolution that is fair and in the best interest of both parties.

Thank you for your time again in looking into this matter.

Case (removed

Note: edited by moderator to remove case number.
 
Last edited by a moderator:

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,719
12,710
113
New York
www.promalvacations.com
#2
First- the agencies you are complaining to are overkill. The Federal Reserve? Why?

The BBB cannot do a thing for you. They merely will ask for PayPals side, they have no jurisdiction nor can they force them to do anything.

Some questions- are the transactions large dollar amounts?

You say you had months of fine tuning. What does that mean? Were people getting wrong items or no items?

What are you selling?

Are you sure you have not Received any complaints for items not received or poor quality?

Can you give us a link to your store so we can take a look so your feedback to see if there is anything that indicates a problem? Without seeing your feedback, it’s hard for us to help.

What I suggest is you use our company contacts for PayPal and escalate this to the Executives at PayPal. Have you only dealt with Customer Service?
 
Likes: jsn55
Sep 19, 2015
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#5
PayPal gives buyers 180 days to dispute something which is why a hold is 180 days. It seems they hold the entire amount.

PayPal is not a bank but a money transmitter or something like that so I am not sure what sort of regulatory body oversees them — and now there is a trend in some areas for less governmentaL regulation so there may be less recourse for a user.
 
Jun 3, 2018
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#6
First- the agencies you are complaining to are overkill. The Federal Reserve? Why?

The BBB cannot do a thing for you. They merely will ask for PayPals side, they have no jurisdiction nor can they force them to do anything.

Some questions- are the transactions large dollar amounts?

You say you had months of fine tuning. What does that mean? Were people getting wrong items or no items?

What are you selling?

Are you sure you have not Received any complaints for items not received or poor quality?

Can you give us a link to your store so we can take a look so your feedback to see if there is anything that indicates a problem? Without seeing your feedback, it’s hard for us to help.

What I suggest is you use our company contacts for PayPal and escalate this to the Executives at PayPal. Have you only dealt with Customer Service?

Thank you for your quick reply. i will try and answer each question as complete as posssible. All transactions are from my website www.allthemuchiz.com and the items sold were electronics, laptops mostley, and the price was from $700 to $1500 with some orders being up to $3000. In about a months time i sold over $40,000. as of today i have only had 1 chargeback which was an unauthorized transaction and was covered under paypals seller protection policy because the billing and shipping address was the same and i provided proof of delivery. Paypal limited my account on 4.10.2018. my website does not have any reviews but you can check my ebay store names All The Muchiz and my profile name is jamemoy3 and there you can see the type of feedback i was getting. i have cancled my ebay store but you should still be able to see my feedback and my website is in limbo waiting for me to decide to continue with this line of business or just move on to something else. Since all this has happened its been hard to get a payment processor and i want to make sure i know what im doing before i move forward so not to make things worse. thank you. Also my fine tuning was with SEO and using google and bing advertising.
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,719
12,710
113
New York
www.promalvacations.com
#7
I think you just answered your own problem. You started selling electronics in big dollar amounts quickly. That is one of the biggest areas of possible fraud. I am not sure it’s normal for a new seller to immediately be selling volumes of large dollar amounts. You sent from being a small seller for two years to selling $50,000 in a month. That’s a huge red flag.

You also are using a drop shipper- you don’t physically have the stock on hand you are selling. That’s a huge problem for PayPal because of their buyer guarantee. What if your drop shipper runs out of stock? PP is open to a claim from your customer for slow shipping or non existent item.


$40,000 in a month for a new seller is definitely a red flag. But selling by drop shipping is also an issue because you can’t guarantee stock of what you are selling.

They are being cautious in making sure that you are legit.

It is difficult to find a payment processor due to the type of items you sell and due to the dollar amounts.

It’s been nearly a month since you threatened them with all the writing to the Places you said you were writing to. What was the outcome of your correspondence you sent out May 9?
 
Likes: jsn55

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,719
12,710
113
New York
www.promalvacations.com
#8
PayPals user agreement states this about business accounts. Have you furnished them with copies of your business credit report or your personal? Did you complete a Commerial Entity Agreement? There are many terms you need to adhere to operating a business on PayPal. You might want to thoroughly read through the agreement about why and how they can hold your balance and what type of information they are looking for. You might provide them with information that makes you a risky business.



By opening up a business account or converting a personal account to a business account, you certify to us that you are using it primarily for a business or commercial purpose. You also consent to PayPal obtaining your personal and/or business credit report from a credit reporting agency at account opening and whenever we reasonably believe there may be an increased level of risk associated with your business account.

In addition, when the activity through your business account reaches certain thresholds or involves certain business segments or activities, you are required by the card networks to agree to a Commercial Entity Agreement to allow you to continue accepting Visa and MasterCard payments. In this case, these Commercial Entity Agreements will apply to any payment processed by PayPal on your behalf and will form part of this user agreement.

https://www.paypal.com/us/webapps/mpp/ua/useragreement-full

There are too many red flags with what you are doing.
 
Jun 3, 2018
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#9
Is this a letter that was already sent? Now that May 9th has passed what happened? What were the 2 chargebacks?
Thank you for your quick reply. i sent the letter to as many people from paypal that i was able to get an email address for. it was an old list so im not sure if anyone has actually seen it or not and the 2 negitive feed back i have had was through ebay and was not part of what is going on now. i have had only one chargeback from paypal and that item was sold from my website and is part of this issue. i sent the letters 1 month after paypal limited my account which was on 4.10,18 (account limited)... 5.9.18 (letters sent)...1 chargeback as of today.
 
Jun 3, 2018
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#10
I think you just answered your own problem. You started selling electronics in big dollar amounts quickly. That is one of the biggest areas of possible fraud. I am not sure it’s normal for a new seller to immediately be selling volumes of large dollar amounts. You sent from being a small seller for two years to selling $50,000 in a month. That’s a huge red flag.

You also are using a drop shipper- you don’t physically have the stock on hand you are selling. That’s a huge problem for PayPal because of their buyer guarantee. What if your drop shipper runs out of stock? PP is open to a claim from your customer for slow shipping or non existent item.


$40,000 in a month for a new seller is definitely a red flag. But selling by drop shipping is also an issue because you can’t guarantee stock of what you are selling.

They are being cautious in making sure that you are legit.

It is difficult to find a payment processor due to the type of items you sell and due to the dollar amounts.

It’s been nearly a month since you threatened them with all the writing to the Places you said you were writing to. What was the outcome of your correspondence you sent out May 9?

as of today i have recieved zero responses and i never followed through with making the complaint to the different agencies i said i would. i guess i was being hopeful paypal and i could work it out. i understand their concerns but i would think they would give me a warning to slow it down some instead of shutting me down. At least let me know what i was doing wrong so i could fix it. I think it was premature considering there has been no evidence of any wrongdoing.
 
Jun 3, 2018
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1
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#12
i have been selling on ebay and using paypal for nearly 2 years and only had 2 negitive remarks. within the past 6 months i opened an online store using a dropship wholesale company. After a few months of fine tuning and using google and bing advertising media i started to get sales. Unfortunatly i grew to fast and with no explaination paypal permanatley limited my account and the account of my wife and is holding nearly $8000 hostage for 6 months. They did this 4 days before we were to get married. Since then i have had only one charge back and was under paypals seller protection policy. every order that i fulfilled was processed the exact same way with all the supporting documents on file with paypal.I still have not been told the reason why this action was taken. I received two phone calls from PayPal’s risk management department asking specific questions about my business which I answered in depth. After each call I asked if they needed anymore information and was told “no” both times and that everything was fine. The second person even congratulated me and sent me information to help in the growth of my business. 20 minutes later I get a third call permanently limiting my account with no explanation except for some canned generic explanation about PayPal not supporting my business model. I see no reason for what the have done. they have cost me and my wife unnecessary hardship and has ruined my hopes of a business by doing this. i have emailed every executive that i can come up with and not one has retuned any type of corrosponence. I dont know what else to do but i do know they should not be allowed to do this. i hear they do this often and have been sued in court for such practices. Any help would be appreciated. Thank you. Date of limitation 4.10.2018 I have attached my letter to paypal which includes the only email i recieved from paypal on this matter. i tried to attach this but couldnt for some reason so here it is. the letter i sent to paypal:

Re: Case ID Number: (removed)


I am respectfully requesting that the hold on my funds/account be lifted. I am not necessarily requesting that my account be re-opened or allowed to continue to use the PayPal service, as I have already taken my business to your largest competitor and I am no longer in need of PayPal’s services.

I still have not been told the reason why this action was taken. I received two phone calls from PayPal’s risk management department asking specific questions about my business which I answered in depth. After each call I asked if they needed anymore information and was told “no” both times and that everything was fine. The second person even congratulated me and sent me information to help in the growth of my business. 20 minutes later I get a third call permanently limiting my account with no explanation except for some canned generic explanation about PayPal not supporting my business model. Here is the first and only email I received from PayPal:

“----------------------------------------------------------------------
There's an issue with your account
----------------------------------------------------------------------
Hello James xxxx,

We recently noticed an issue with your account.
What's the problem?
We need some more information about some of your recent sales.
Case ID Number: (remove)
Because of this issue, your account has been permanently limited. We understand this may be frustrating and inconvenient but you'll still be able to see your transaction history for a limited time.
You can get more details about your account limitation in the Resolution Center. For more information, please contact us and we'll do our best to help.
You'll be able to withdraw money from your account within 180 days. We'll email you when it's available. We just want to make sure that you have money in your account to cover any payment reversals.

I still have yet to receive any chargebacks or complaints on my recent sales. I have previously requested a review/appeal of my case which was denied. Although I still disagree with the decision to deny my appeal I will abide by it – however because I feel that holding my funds for 180 days for a non-specified violation of PayPal’s Acceptable Use Policy is excessive, and perhaps a punitive abuse of power, I will be filing complaints with the
following agencies on Wednesday morning, May 09, 2018 if I am not satisfied with PayPal’s response to this request to release my funds:

(agencies in the states that I reside or have a business presence in)

The Michigan State Office of the Attorney General
https://secure.ag.state.mi.us/complaints/consumer.aspx
https://www.michigan.gov/treasury/0,4679,7-121-1773-42077--,00.html

The California Office of the Attorney General
https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

The Arizona Office of the Attorney General
https://www.azag.gov/complaints/consumer


Additionally:
The United States Federal Reserve
https://federalreserveconsumerhelp.gov/about/consumer-complaint.cfm

(I understand that PayPal does not operate as a “bank” which is precisely why they may be

interested in such complaints)

The Better Business Bureau:
https://www.bbb.org/consumer-complaints/file-a-complaint/get-started


All complaints will be filed “online” Wednesday morning, May 09, 2018 and written copies will also be sent via certified postal mail. I understand PayPal’s need for holding funds for credit card chargeback purposes, however
a review of my account history for the last year will reveal a very low chargeback rate as well as a very high customer-satisfaction rate. I feel that any reasonable person would conclude that holding my entire balance for 180 days is excessive and may be viewed by some as punitive or as already stated, an unnecessary abuse of power and perhaps even contrary to the laws of some states. That being said I have no problem with, and agree to leaving a balance of $1500 for credit card chargeback purposes for the duration of the 180 days. I feel that this is a fair resolution while still leaving PayPal with the means to charge back any future credit card disputes to my account.

Please be aware that replying with the standard “this is part of the terms of service that you agreed to” will not satisfy my request, or deter me from filing my complaints with the agencies listed above on the morning of Wednesday, May 09, 2018. It will be up to those agencies to determine if PayPal is operating within the law, abusing power, etc. I am simply seeking a resolution that is fair and in the best interest of both parties.

Thank you for your time again in looking into this matter.

Case (removed

Note: edited by moderator to remove case number.
PayPals user agreement states this about business accounts. Have you furnished them with copies of your business credit report or your personal? Did you complete a Commerial Entity Agreement? There are many terms you need to adhere to operating a business on PayPal. You might want to thoroughly read through the agreement about why and how they can hold your balance and what type of information they are looking for. You might provide them with information that makes you a risky business.



By opening up a business account or converting a personal account to a business account, you certify to us that you are using it primarily for a business or commercial purpose. You also consent to PayPal obtaining your personal and/or business credit report from a credit reporting agency at account opening and whenever we reasonably believe there may be an increased level of risk associated with your business account.

In addition, when the activity through your business account reaches certain thresholds or involves certain business segments or activities, you are required by the card networks to agree to a Commercial Entity Agreement to allow you to continue accepting Visa and MasterCard payments. In this case, these Commercial Entity Agreements will apply to any payment processed by PayPal on your behalf and will form part of this user agreement.

https://www.paypal.com/us/webapps/mpp/ua/useragreement-full

There are too many red flags with what you are doing.
i can uderstand everything you have said here but what i dont understand is why i wasnt told these things and just shut down. I am new to this type of business and wasnt aware of the things i need to do to continue selling on this type of platform and if paypal would of ask for any documentation then i would of provided it but they didnt. i understand that ignorence is no excuse but im just trying to provide a living for me and my family but instead it seems i got kicked in the teeth for something that didnt happen. So i guess my question is what can i do to rectify this situation?
 
Likes: Neil Maley
Sep 19, 2015
2,168
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#13
I think Neil is correct, the system flagged you because of selling risky items (in paypal’s) view, went to a high volume quickly, and one chargeback. There are so many ways dropshipping can go wrong, such as not being able to verify the quality or authenticity of the items being offered. Now you may have a great supplier — But all PayPal saw was a high amount and now a chargeback. PayPal really has a near monopoly on being a payment processing system.

Have you looked for alternatives that cater to small ecommerce businesses?
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,719
12,710
113
New York
www.promalvacations.com
#14
If you are perpetrating fraud, they aren't going to warn you so you can pull your money and they get stuck with claims. They freeze that money in case you have claims come through later.

Contact your business bank - they have credit card processing that they can usually sign you up with.

As Christina remarked about drop shipping - you also lose your seller protection if you don't have signatures and proof of delivery from your clients you are sending to. So it is for your own protection as well.

We have company contacts for PayPal on top of our pages. Read how to write to them and try to write but since you threatened them already - they most likely will not respond to you. They are waiting for your complaint. Just as if you threaten legal action - whoever you are speaking to will clam up to avoid saying anything that can harm them. You shouldn't have made the threats but you may have to follow up on them now that you've done it because I am not sure that PayPal will correspond with you now.
 
Jun 3, 2018
8
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#15
If you are perpetrating fraud, they aren't going to warn you so you can pull your money and they get stuck with claims. They freeze that money in case you have claims come through later.

Contact your business bank - they have credit card processing that they can usually sign you up with.

As Christina remarked about drop shipping - you also lose your seller protection if you don't have signatures and proof of delivery from your clients you are sending to. So it is for your own protection as well.

We have company contacts for PayPal on top of our pages. Read how to write to them and try to write but since you threatened them already - they most likely will not respond to you. They are waiting for your complaint. Just as if you threaten legal action - whoever you are speaking to will clam up to avoid saying anything that can harm them. You shouldn't have made the threats but you may have to follow up on them now that you've done it because I am not sure that PayPal will correspond with you now.

Thank you all for your insight. I suppose I would be cautious too but paypal has every customer signature and every tracking number for all packages so i cant see where they could suspect fraud. Billing and ship to addresses matched and paypal themselves verified the buyers. This is why this is so confusing to me it just doesnt make sense. Why wont they tell me exactly why they did this. It just makes me think that they are up to no good. My little bit of money doesnt mean anything to them. i wonder how many other people they do this to without having to give a reason as to why. thanks again for all your help if you can think of anything else i can do i would appreciate it. Til then i will start over and use your communication advise and start emailing them again and see if it works.
 

Neil Maley

Moderator
Staff Member
Advocate
Dec 27, 2014
12,719
12,710
113
New York
www.promalvacations.com
#16
They are limiting you because you have racked up very large sales amounts in a very short period of time with electronic items. Lots of red flags. No one goes from small Sales to $40-$50,000 in a month that doesn’t raise suspicions.

It’s a Guy really gave you the options - wait the 180 days or sue them.

I think you should start with a complaint to your State Attorney General.
 
Feb 16, 2018
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#17
I think the biggest issue is you have no way to verify that the products that you list are 100% genuine. These items that you have listed have a high rate of knock-offs on sites like eBay. If you have sold any items that you listed as a name brand, but were in fact knock-offs, you may never get the money back.
 
Jun 3, 2018
8
1
3
52
#18
They are limiting you because you have racked up very large sales amounts in a very short period of time with electronic items. Lots of red flags. No one goes from small Sales to $40-$50,000 in a month that doesn’t raise suspicions.

It’s a Guy really gave you the options - wait the 180 days or sue them.

I think you should start with a complaint to your State Attorney General.
ok i will do that. because i have already made mistakes on this issue i dont want to make any more. is there anything i should not do

I think the biggest issue is you have no way to verify that the products that you list are 100% genuine. These items that you have listed have a high rate of knock-offs on sites like eBay. If you have sold any items that you listed as a name brand, but were in fact knock-offs, you may never get the money back.
everything that is sold is exactly as described. i purchased a few things myself just to be sure. everything im doing is legit my problem is i am new to e-commerce and thought the sky is the limit not thinking how it would look to the outside. thank you for your reply