Paypal closes my account and holds thousands.

This is a warning to anyone who relies on paypal to process transactions for their business.

Get a backup processor (or 2) if you plan to do any volume.

My story.

I started with Paypal in the year 2000. One of their executives, a director business development named Tyler Hoffman asked me to join when they were a startup and I did. In that time I have done a huge volume of business with them and never had any problems.

Long story short.

  1. My paypal volume has increased slightly over the last 6 months.
  2. Monday October 19th I receive an email stating my account has been “limited” until further review. Essentially they froze my account until further notice. I contacted them and got it sorted out. They never explained the problem
  3. That night when they “unfroze” my account I did what any logical person would do. I withdrew most of my money to my bank account.
  4. Thursday October 22nd I got an email saying that my account is closed without the option to appeal. Turns out my account had a “suspicious withdraw” which was me clearing funds after they unfroze my account.

If you don’t have a paypal account imagine this. You have thousands in your checking account and your bank freezes it for no reason. When you call them they tell you they can’t put you through to anyone in charge. You will get your money in 6 months with no interest payments. Thanks for choosing _____________.

I am not suggesting that you leave paypal. I am recommending it! I will tell anyone who will listen.

The sad part is I have read no shortage of horror stories in forums about this and always thought “It will never happen to me”. Then it did.

Resources:
http://www.paypalsucks.com
Internet Marketing Forum

 

UPDATE

Paypal has seen the light and re-opened my account (after some badgering from me and maybe even this blog post). Not before I migrated most of my business elsewhere. They won’t get them back but they are a necessary evil in my business. I am still suggesting you use someone else.

  • Steve

    I have just noticed how slow payments are now when you try and withdraw your own money from Paypal - Two weeks ago it took an average of 3 to 4 days to hit my bank account - They have now introduced a rapid withdraw (they say 1 to 2 days) but charge £5 for it. Since introducing £5 t withdraw your own money ASAP -A SERVICE IT SHOULD BE ANYWAY AND FOR FREE. I withdrew £50 3 days ago and it still says pending in Paypal - this changes to completed when they actually initiate the Transfer - SO FOR 3 DAYS NOW THEY HAVEN'T EVEN INITIATED THE TRANSFER - WHEN THEY DO IT TAKES ANOTHER 4 TO 5 TO HIT MY BANK ACCOUNT.

    Definition of Paypal and Ebay - Forever try and milk them for what you can get no matter what - simly put DISGUSTING a monopoly investigation is warranted - Please GOOGLE do an auction site so I can use my Googlepay.

  • This is a very informative post, maybe its best to keep your paypal balance to a minimum, so whatever happens, you won't lose that much

  • Had a similar thing happen to me. I had been using Paypal for over five years as an ebay seller. Decided to upgrade the account, as I was expecting a larger volume of sales for the coming year... They froze my account. I had supposedly violated something in the terms of service (??) and that was it. No appeal. Nothing. They held about $1800 of mine for almost two months. I had fully expected to never see it again, though they suddenly unlocked it one day. I got my $$ out of there asap. I can't believe I got the money away from them. I have read plenty of horror stories since then about people losing HUGE amounts of money. And there is no recourse.

    Paypal sucks. I now use Alertpay, without problems.

  • thanks for relating the woes of ypal to everybody online, its long that i have been having extreme disgust for this so-called payment processor merchant that rely solely on the advent of sophisticated software proliferation

  • Maureen

    If I had enough power, I'll wipe this payment solutions provider (PayPal) off the face of the earth! Hokus pokus...poof! Is PayPal still in existtence?

  • So sorry to hear about what happened man. And thanks for sharing this experience, even though it's a sad one. I will take your advice and make sure I don't have much money with them.

    I think if we all switch to other alternatives, they will check their brains.

    Take care!

  • Sounds like a great opportunity. Screw 'em and start your own payment system.

  • Tough one there buddy. Thanks for the heads up.

    I think we all need to be very careful who we choose for payment processing.

  • Sorry to hear this man. PayPal is for people who sell the occasional used DVD on Ebay, not for serious business people.

    I strongly recommend PowerPay as a merch processor. They are Authorize.net resellers, but they were started by internet marketing people, and understand our business. I think I pay around $25 a month for reporting, etc... and the transaction fees are stupid cheap.

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