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Payment Processor Holding $50k

Discussion in 'Banking, Finance, Investments' started by GulfCoastKid, Aug 10, 2010.

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  1. GulfCoastKid

    GulfCoastKid Law Topic Starter New Member

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    Thank you for taking a moment to read my problem. I hope that somebody is willing and able to give me some advice. Thank you in advance.

    I had been a PayPal member since they first started in 1998. For ten years I had no problems using their services. In 2008 I started a company that sold medical devices for seniors. This was a very difficult company to operate, as this demographic often called their credit card company prior to sending back the merchandise for returns, which resulted in a large number of chargebacks.

    I ended up selling the company because of these difficulties. PayPal wanted to close my account due these chargebacks. I spoke with the senior risk manager about this. I explained to her that I was no longer in the business and did not want this to ruin the good relationship that we have had over the last ten plus years. She stated that "this account will never be opened again". I asked her if that meant that I could never do business with PayPal again and she replied, "Listen carefully, THIS account will not be open again."

    A few months later, I had plans to open this membership site. I called PayPal and explained my situation and what I was told by the risk manager. PayPal told me to open an account online and call back to activate it. When I called back, I was told that they would have to remove my personal information from the old account and move it to this account, but they could not do that without going through their risk department. A day later I was called back and my new account was opened.

    I began selling an eBook that I wrote. It sold very well and I did a few thousand dollars worth of business over the next several months.

    Three months ago, I turned that eBook into an online membership course, where students pay an upfront fee and then a monthly recurring fee via PayPal subscriptions.

    About a month after doing steady volume, my PayPal account was placed in "Limited Access" pending me supplying them with personal information that included a copy of my government ID and a utility bill. I supplied the information and the account was unfrozen. My business went on successfully.

    Last week I was presented with the opportunity to run an online webinar in front of a large group. I was pitching the membership of $199.00 plus a recurring $19.00 a month via PayPal subscriptions.

    I called PayPal ahead of time to alert them of possible large amounts of sales. They transferred me to their security department, who noted the account and said that it was very good that I called ahead of time. I agreed to keep 50% of the money in the account for a few weeks to show that there were not going to be any problems and that the customers were satisfied.

    The webinar was a success and $58,000 worth of memberships plus the recurring monthlies were sold. The folks that hosted the webinar are due 50% of that money as their commission. It was to be paid after thirty days, which is when the thirty day money back guarantee ended for those that purchased the course.

    I made three $3,000 withdrawals to my bank account and left the rest in place.

    Since the webinar, there have been seven refund requests, all of which were processed immediately.

    Yesterday morning, I received notice that my PayPal account has been frozen. I immediately called PayPal to discuss it and was told that I was not supposed to have a PayPal account because of a past account being closed. The security department told me that the only person that I can speak to about this is the risk manager that I had dealt with previously. I was told that she was awaiting my call, but I can only get through to her voicemail system and she has yet to call me back.

    Strangely enough, they are still allowing payments to come into the account, as recurring payments come in daily. Even though they are still accepting payments, I do not have access to any of the funds. The total amount is in excess of $50,000. The recurring fees total over $150,000 per year. I also fear that they will cancel those subscriptions.

    I am also not able to process refunds from those funds to any new members that take advantage of the guarantee.

    I am in a pickle here because I am unable to to get in touch with the what PayPal says is the only person that will speak to me.

    Any advice would be appreciated. Again, I thank you in advance.
    Last edited: Aug 10, 2010
  2. army judge

    army judge Super Moderator

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    If you want immediate relief, you're going to have to seek injunctive relief.
    A court issued injunction (or the threat thereof), will cause PayPal to immediately lift the ban.
    If this is done correctly, you'll have the funds released (or better yet wired into a real bank
    account) immediately, or within hours.

    To do this properly, you should speak with a local attorney.
    It'll cost you a few bucks, but its the quickest way to get the attention of the "dunderheads" at PayPal.
    How much is a few?
    I suspect most lawyers would do it for between five and six thousand US dollars.
    The whole thing could be done within 24 hours, no more than 48 hours.

    Once you get your money, stop using PayPal and use a real payment processor.
    Sure, it'll cost a little more, but you won't be subject to the whims of the "dunderheads" at PayPal.
    Besides, you have a real business.
    You're making significant money.
    Why on earth would you want to deal with (or force your customers to deal with) the "dunderheads" at PayPal?

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