PayPal holds funds unlawfully

[gpeter]

Hello there,

I have a problem with PayPal. My account was limited due to unknown reason and the only explanation PayPal gave me was "excessive risk involved".

This is what was going on:
I have opened up a business account with PayPal a month ago for my company to use them as a payment method on eBay. I'm selling cell phone accessories (not even cell phones), and all my merchandise is legit/authentic and not counterfeit/China-made stuff.

After few days of selling they emailed me saying that the account is limited and asked me to confirm my identity and provide copy of my SSN which I did. Right after I submitted the documents they unlimited the account and everything was fine. I was able to transfer some money to my bank couple of times (total of almost $2000)

After about a month of selling on eBay I applied to Website Payments Pro to use PayPal as a credit card processor for my website and this is when everything started. The application for Website Payments Pro was approved by them the same day. Four days later I receive another email from PayPal saying that they limited the account once more and they require some additional information:

1. Contact information of my suppliers.
2. Tracking information for specified transactions
3. Set credit check address.

I have submitted 1 & 3 to them.
When I tried to enter the tracking information using the Resolution Center there were no transactions listed. I gave them a call and they told me to provide tracking info for the latest transactions that I received (that was Monday evening 05/10/10). So I thought I'll do it the next day first thing in the morning. But, on Tuesday morning I received another email from them saying that the Appeal was Denied and account is limited forever.

I called them immediately and the Agent told me that the account is limited and he cannot do anything to help. I asked to speak to the supervisor and he gladly transferred me to him. All I could get out of the supervisor is that the account was limited due to high risk, and they don't want to continue to offer their services to me. When I asked them why exactly the account was closed he answered that he cannot disclose this information to public. My other question was why you still accepting payments from eBay, as you say that the account is shut down, and his answer was that "It's impossible, as your account is closed and you cannot accept any more payments."

After the account was suspended on May 10th, 2010 they still kept accepting payments on my account and up do date they collected more than $2400.00.

For the whole period that I used PayPal to accept payments for my eBay sales I have not had any disputes or chargebacks. I have maintained 100% policy compliance with eBay and PayPal and also maintained 100% positive feedback on eBay. There were more than 900 sales and more than 250 positive feedbacks at the time of suspension.

As of now PayPal holds over $12000.00 of my money, which as they say will be released in 180 days.

Could you please recommend a course of actions I should take if not to reinstate my account but to get my money back.

They emailed me that if I want obtain copies of the information they reviewed in deciding to place a limitation on my account, I will have to obtain a subpoena. Do you know by any chance if I need to open up a case in court to get the subpoena or I can do that without it.

Thank you.

 

[army judge]

They've got you and your money.
They're holding your $12,000 hostage.
The only legal way for you to free it is by court process.

Speak to a lawyer and sue them.
Otherwise, the crooks will give you YOUR money in November!

 

[Michael Wechsler]

If it's any consolation, I have found eBay a very frustrating company to manage business accounts successfully. My experience with regard to their supposed review of the legitimacy of businesses to be quite poor and I can only hope this changes at some point. They try to avoid this but the only way to get a good response is to send them a certified letter, addressed to the right party to receive it. That is the first line of hitting them with a need to respond or potentially have some lawyer sue them for far more than it would be worth to make you just go away.

 

[Atlantic]

Searching for lawyer who could help with filling a small suit against PayPal

Hi All,

We are a foreign company involved in e-commerce who has been using PayPal as a payment method for over a year on our sites. Following a complaint filed by one of our customers, our account has been closed for 180 days, with $4,000 locked inside...

I am interested in filling a small law suit against PayPal, in order to speed up the release of our money.

Is there anyone in this forum who is interested is giving me some assistance?

 

[Michael Wechsler]

What kind of assistance do you need? Paypal probably has the right to lock your account according to their rules. If you're going to try to get that money back, your best bet is to get hold of a person at Paypal and try to negotiate with them directly and also think about threatening a suit against a customer who is responsible for locking your account. You might want to make it clear to the customer that, if you're right and Paypal unlocks the account, you will sue them for many thousands of dollars more - the obvious consequences of wrongfully causing a lockout of the account of a vendor.

 

[Atlantic]

In my opinion, the customer has nothing to do with this issue. My relationship with PayPal is long, while a single customer's complaint is just a single episode. PayPal claim that they have decided to close our account since they consider it as "high risk". Fair enough, if I'm not wanted as a customer, then I don't want to be a customer. I just want MY money back.

The help that I could use is filling a complaint in the "small court" (I'm not sure how it's called in the states, as I am a international client), and/or anything else that you think might help in this case. I tried speaking to a PayPal rep on the phone, (although I never tried threatening with a law suit), and it didn't change a thing. To be honest, I never expected it to.

 

[tpajet]

You have to be careful when selling using paypal. I do antique radios as a hobby, and on one of the main hobbyists websites this has been brought up many times where someone will sell something via paypal, and they clearly tell the person that the radio is not in working condition, only to have the buyer demand a refund as much as 6 months later and saying that radio doesn't work, and paypal will still refund it with no research at all.

 

[Michael Wechsler]

You have to be careful when selling using paypal. I do antique radios as a hobby, and on one of the main hobbyists websites this has been brought up many times where someone will sell something via paypal, and they clearly tell the person that the radio is not in working condition, only to have the buyer demand a refund as much as 6 months later and saying that radio doesn't work, and paypal will still refund it with no research at all.

While we will accept paypal here shortly, I will refuse to use Paypal indefinitely for any online purchases that are not with a physical store after my recent experience. I'll be writing an article about it shortly.

In short, I reported a clear fraud to PayPal and two supervisors expressed to me that, in essence, they really don't care if it doesn't concern an area that they believe is not covered by their guarantees. I demanded a second supervisor and they reiterated the same thing.

Here is the way the scam works. You order services, software or anything that can potentially be sent digitally (which is anything but a physical product). The seller responds on the last day with nothing more than an "invoice number" for an alleged digital download. Paypal shuts its ears and doesn't want to hear anything further, per these two supervisors.

I asked these PayPal employees what some claim of a "digital download with an invoice number" had to do with my dispute which clearly stated it was for a deposit on services not rendered. They didn't want to know. They said that if an account already has fraud complaints listed, then they would flag it. So I asked them the obvious follow up question - if you don't care to hear why this is an obvious fraud, then how will these PayPal customers rack up fraud listings on their account if you refuse to read what occurred and make a rational, reasonable decision? It was completely lost on them.

I got my money back but am grateful to learn how incompetent PayPal is with regard to fraud detection. Perhaps unrelated, I found the exact same experience with eBay. It's as if they just shut down the moment they think (and usually incorrectly) that they are not involved or liable for the matter taking place.

As a whole, I always use my credit card and never PayPal when I can do so.