Journalist wants to speak to Businesses who have had their PayPal Account Limited

eShop

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Yeah sure here you go.

The payments processing company used by up to 14 million people has been accused of using anti-fraud measures “too zealously”
PayPal has been accused of holding small businesses and amateur traders on eBay hostage by barring customers from accessing their money for up to six months.
The processing company used by up to 14 million people in the UK boasts of being “the fastest, safest payment service on the planet”. But thousands of customers, from medium-sized enterprises to amateur traders on eBay, have their accounts “limited” each year on unproven and automatically generated suspicions of fraud, and are prevented from cashing payments. For individual customers this is frustrating but for small businesses it can be fatal.
Phil McCabe, a senior policy adviser of the Forum of Private Businesses, says: “With small firms across the UK already owed some £24 billion in late payments, PayPal’s withholding of payments is extremely frustrating.”
Most people encounter PayPal on eBay, the internet marketplace, which offers a cheap and easy way for small and medium-sized enterprises to sell goods and services. Anyone selling on eBay must have a PayPal account, and in many cases business proceeds smoothly. However, under PayPal’s terms and conditions it can freeze an account and keep cash on hold for 180 days if a transaction is flagged as “high-risk”.
While customers accept that this helps to prevent fraud, they say that PayPal employs the practice too zealously. It has also been accused of being obstructive to customers desperate to get their accounts unlocked. This has led to anger in the small-business community as it can leave enterprises already struggling in the tough economic environment without essential cash.
Christopher Taylor, operations manager of Mobile Distribution Solutions, Liverpool, has vowed never to use Pay-Pal again after it withheld £900 of payments and sent e-mails to customers wrongly implying there had been fraudulent activity on his business’s account.
Mr Taylor, 31, says: “We are a mobile handset distributor and mainly operate in the wholesale market but earlier this year we decided to sell to retail customers via eBay. It was going quite successfully for a number of weeks until PayPal said that it was going to limit our account for 180 days.”
When this occurred there were payments worth £900 in the company’s account, which the business was suddenly unable to access. To make matters worse, money held in a PayPal account earns no interest for the customer. Pay-Pal, though, can earn interest on the balances left in its system.
Mr Taylor says: “We have a high enough turnover not to worry but for some companies £900 can be the difference between making it or breaking it. It was only when we threatened legal action that, lo and behold, the account was unfrozen.”
PayPal’s criteria for determining what transactions are “high risk” can catch sellers out, warns Anthony Trollope, managing director of The Supplier Central, a networking website. He says: “Many businesses cite PayPal’s often complex and long-winded rules as the ultimate reason their PayPal accounts were suspended — in some cases with thousands of pounds held for an indeterminate time period as a result. These are not merely isolated cases of business naivety but catch even the most experienced business owners out.”
In Mr Taylor’s case the fact that he was dealing in mobile phones was enough to put him into the “high-risk” category.
Hugo Costa, 22, had his account frozen because he did not have enough positive “feedback” comments, a situation that he found maddening because it was out of his control.
Mr Costa, of Ealing, West London, set up HD Station, a business selling electrical equipment, computer games and film merchandise, in July last year. After he had made four or five sales on eBay he received an e-mail saying that PayPal was freezing his account and the funds wouldn’t be released until he received positive customer feedback. Regular users of eBay will know that the website displays sellers’ positive and negative feedback ratings from buyers.
Mr Costa says: “After we got 30 good feedback statements the limit was removed but that meant we were left three months without access to our money.”
It wasn’t long before his account was frozen again, this time because he was doing an increasing amount of trade on eBay. This time it was a “sudden change in selling activities” that marked him out as high-risk.
Cathy Donald, a 23-year-old PR consultant from Watford, Hertfordshire, felt equally poorly treated when her account was frozen because of one piece of negative feedback.
Ms Donald is not a small-business woman but one of the army of part-time traders who sells items on eBay to make a little extra money. When some clothing she sold went missing in the post the buyer posted a poor review on the eBay website. As a result, her account was frozen and she was unable to withdraw any of her money. Although she has offered a refund to the buyer, she has been told that until she has more positive feedback she will have to wait 21 days before she can get her hands on payments made into her account.
She says: “Until I get more positive feedback PayPal are going to keep withholding my money each time I receive a payment, so I don’t particularly want to sell on eBay again because I know this is going to keep happening. It’s a bit of a catch-22.”
Rob Skinner, of PayPal, says: “It’s certainly true that we treat some goods as higher risk than others. Top smartphones and computers, for example, are tempting targets for fraudsters because of their value and the overwhelming demand for them. Other factors we consider are a seller’s track record, complaints and the number of chargebacks received — and a sudden large spike in money being received. Our aim is to protect other customers and PayPal from losses.”
PayPal refuses to say how many accounts are frozen each year, and it emphasises that it is mainly new and untested sellers who risk a freeze. But even if only a small percentage of total sellers are affected, that still runs into hundreds of thousands of users. When it does happen traders say that the company’s poor customer service adds to their frustration.
Mr Taylor says: “The attitude of the staff was derogatory. I was told that PayPal was like a bank, as if that excused everything. But if NatWest told me it was freezing my account for 180 days I would move to another bank. You don’t have that choice on eBay.”
Shelley Michaels, a 25-year-old trainee lawyer from Bedfordshire, was so incensed when PayPal refused to unfreeze her account and hand over her money that she took the company to court.
She says: “I called them 12 times and provided them with the information they asked for but the customer support was very unhelpful.”
Mr Skinner says: “I would like to apologise to any customer who’s had a poor experience with PayPal. This is unacceptable, and we’re keen to learn from these experiences.”
He adds: “The 180-day period was traditionally used because consumers often had up to 180 days to raise a chargeback on their credit card. It’s important to note that the 180-day period does not apply to all customers — many have no such restrictions, while others may see funds withheld for shorter periods. We are continually reviewing our approach and developing more sophisticated ways of assessing the risk, and in many cases releasing funds sooner. It’s worth remembering that we have over 14 million customers in the UK, and the vast majority of transactions go like clockwork.”
Case study: ‘No justification for holding on to my funds’
Many eBay traders who discover that their PayPal account has been frozen dejectedly accept it, while some release their frustration through websites such as PayPalSucks.com and PayPalWarning.com. Others take their complaint to the Financial Ombudsman Service. But Shelley Michaels, a trainee lawyer from Bedfordshire, was so angered by how she was treated that she took PayPal to court — and won.
Ms Michaels has been using eBay for five years, recently to sell DVDs, video games and iPads, and had never had a problem. Then earlier this year she sold goods worth £1,814 — a higher amount than usual, triggering a “high-risk” alert. The next thing she knew, her account had been frozen.
She says: “I provided receipts for the computer tablets and the video games consoles to show that I had lawfully obtained the items. I also supplied information to prove that buyers had received the items. I had even received positive feedback for some of the electronics in question.”
But even after 12 phone calls to request that her money be released PayPal still refused to budge. Fearing that her money would be in limbo for 180 days, she bought a County Court claim against PayPal and won her case in Milton Keynes this month.
She says: “The judge said that PayPal had no justification for withholding my funds and ordered it to pay interest and costs.”
Rob Skinner, of PayPal, says: “We accept we handled this case badly and have apologised to the customer.”
 
Aug 22, 2009
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Very interesting read, hope it at least makes them re-think but I won't be holding my breath for changes any time soon, only once have I had my account limited and got it lifted within several hours, some could say I was one of the lucky ones, that's not to say it will stay that way as I know what they can be like!
 

eShop

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Am sorry to say but why would they need to rethink something that obviously works for THEM?
Unless they start dropping millions of accounts or some law is changed there is nothing that will concern them.
They are making there money and that is all that concerns them.

Alistair
 
Aug 22, 2009
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Am sorry to say but why would they need to rethink something that obviously works for THEM?
Unless they start dropping millions of accounts or some law is changed there is nothing that will concern them.
They are making there money and that is all that concerns them.

Alistair

Sad but all too true
 
Dec 28, 2008
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Rob Skinner, of PayPal, says: “It’s certainly true that we treat some goods as higher risk than others. Top smartphones and computers, for example, are tempting targets for fraudsters because of their value and the overwhelming demand for them. Other factors we consider are a seller’s track record, complaints and the number of chargebacks received — and a sudden large spike in money being received. Our aim is to protect other customers and PayPal from losses.”
PayPal refuses to say how many accounts are frozen each year, and it emphasises that it is mainly new and untested sellers who risk a freeze.

His reply above is just out right laughable.

Mr Skinner says: “I would like to apologise to any customer who’s had a poor experience with PayPal. This is unacceptable, and we’re keen to learn from these experiences.”

That old chestnut "keen to learn from these experiences" zzzzzzzzzzzzzzzzzzzzzzzz

Ms Michaels has been using eBay for five years, recently to sell DVDs, video games and iPads, and had never had a problem. Then earlier this year she sold goods worth £1,814 — a higher amount than usual, triggering a “high-risk” alert. The next thing she knew, her account had been frozen.

So what they are saying is, to make sure you don't trigger a "high-risk" alert don't sell more than you normally do. What a load of utter b******s.
 
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May 30, 2005
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It's a shame more folks here don't have any real world experience. PayPal, while I don't appreciate them hold $10k+ of mine, is not doing anything that traditional card processors don't do.

Say you have a barber shop doing maybe 5K per month with a regular merchant account with a bank or whoever, for that matter. Then suddenly you jump to 20k one month. I can guarantee you there will be a limit or a partial hold on your account. Go to 50k and they'd lock your account then and there.

I know B&M retailers who have several merchant accounts, just to keep funds flowing. Take someone selling let's say games, with an average ticket of under 100. They decide to start selling 60 inch TV's. Average sale 1.000, monthly sales triple. You think no one is going to notice?

ALL, yes ALL, payment processors have triggers and people to monitor them and PayPal is by far NOT the first to have hold-backs and revolving holds. They are only more visible online and used by many people with no real business experience who don't understand that anyone extending credit / money not only can, but SHOULD take measures to protect themselves.

Not a day goes by on TSC without someone being told to "protect themselves" by using PayPal when buying from unknown suppliers, but now you're crying because PayPal takes steps to protect themselves.

Are you going to be a business person and understand how real business operates, or are you going to be a consumer playing with business? You can't be both.
 
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So in a nutshell when you start to become more successful you get penalised. You could have a bad month £5k or example ( God i wish ) Next month exceed sales targets by a mile and get shafted. This is not aimed at you Pete.
 

eShop

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Difference between Paypal and Proper merchant accounts or gateways is that all other gateways will be upfront
about there conditions. Most of the problems that people have with paypal is that paypal are a rule unto themselves
and change the boundaries as and when it suits them to do so. I can understand perfectly why most of the holds etc
happen but there is absolutely no reason for them not being able to be more upfront with businesses as to thresh holds
etc etc as every other merchant are.


Alistair
 
Dec 28, 2008
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Ms Donald is not a small-business woman but one of the army of part-time traders who sells items on eBay to make a little extra money. When some clothing she sold went missing in the post the buyer posted a poor review on the eBay website. As a result, her account was frozen and she was unable to withdraw any of her money. Although she has offered a refund to the buyer, she has been told that until she has more positive feedback she will have to wait 21 days before she can get her hands on payments made into her account.
She says: “Until I get more positive feedback PayPal are going to keep withholding my money each time I receive a payment, so I don’t particularly want to sell on eBay again because I know this is going to keep happening. It’s a bit of a catch-22.”

Because someone posted a poor review your account is frozen? Come on paypal explain that.

Mr Taylor says: “The attitude of the staff was derogatory. I was told that PayPal was like a bank, as if that excused everything. But if NatWest told me it was freezing my account for 180 days I would move to another bank. You don’t have that choice on eBay.”

Shelley Michaels, a 25-year-old trainee lawyer from Bedfordshire, was so incensed when PayPal refused to unfreeze her account and hand over her money that she took the company to court.
She says: “I called them 12 times and provided them with the information they asked for but the customer support was very unhelpful.”

I don't know who's in charge of customer services if anyone, but that is down right unacceptable. Where i work the customer is right even when they are wrong and i mean that.
 
May 30, 2005
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I've been called by a prospective buyer telling me on the 25th of the month that they could not place an order on my website using a traditional gateway/merchant account. Not a bit of notification from either the gateway or the processor. I was as in the dark with them as I would have been with PayPal.

Forums are full of posts by sellers who brag about emptying both their PayPal / processor accounts AND the bank accounts they forward funds to daily. Isn't leaving nothing for them to get in case of even a legitimate problem just as underhanded as you accuse them as being?

There are far more crooks and schemers on the web than there are nasty folks working for PayPal. And there are plenty who simply don't understand what they are doing. "Not knowing" when taking others' money is not much of an excuse.

I'm not saying PP is perfect, far from it. I've got buyers as of today who I mark up my cost 5%. PayPal is holding that on every sale I make as a rolling reserve. Plus they are also holding it on the shipping that I make nothing on. So I'm losing money on every sale I make to those folks, as far as having immediate funds to reorder goods. But I keep on selling and don't blame my customers for my situation.

They were holding 15% and I spent quite a bit of time on the phone with a guy whom I was told would call me at an approximate time, he did. We had a "meet you half way" agreement when done. Among other things I got him to understand that I could not handle them holding 15% when my overall gross profit was less than that. Once I explained I needed $900 to replace goods from a $1000 sale, and that $850 would slowly put me out of business - or force me to constantly dig into my personal funds on a daily basis, he agreed to lower the 15% to 5%.

He also reviewed my refunds, claims, disputes, etc. over the years and admitted I was well within their limits, in fact quite low. That probably helped. :)

The magic words for results from most customer service centers - "Please let me speak to your supervisor."
 
Jul 14, 2009
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In this case PayPal doesn't have a single reason to do this with your account.

I know you don't sell on Ebay but most sellers are. If there's a sudden increase in sales PayPal can take a look at you Ebayaccount to see what your feedback is saying. If there's a huge increase in sales it will show in the feedback. If the feedback is positive there's absolutely no reason to put a limit on the PayPalaccount. And this is the big difference between PayPal and other payment processors. You don't sell on Ebay so PayPal has no way to check customer satisfaction (unless suddenly a lot of disputes are opened). Most seller sellers sell on Ebay. So PayPal can perfectly trace for which item the payment is, when it was shipped and check if the customer is satisfied by the feedback left.

If a lot of mony goes through your PayPal and they hold X% of each payment received, a small fortune will build up on you account without you be able to touch it. They should do it differently e.g. the avarage amount of a sale is £ 500 in this case they should hold X% of each payment until they reach £ 1500 and lift this X% once you've reached this limit. In this case there's enough money for 3 disputes. This should be enough.

I'm lucky not to have had any real problems with PayPal (know on wood). I know the internet is filled with stories about people having problems with PayPal, accounts that are being limited without a reason,... PayPal is without a doubt the most popular with the biggest number of users, but you don't read that kind of stories about other payment processors.

There is definatly something wrong with the way PayPal treads it's customers and it's time something is done about it.
 
Dec 28, 2008
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What people should do if their accounts get frozen and they get no satisfaction from paypal is do what this customer done below.

Shelley Michaels, a 25-year-old trainee lawyer from Bedfordshire, was so incensed when PayPal refused to unfreeze her account and hand over her money that she took the company to court.

You can do this through the small claims courts. You can't do it from day one you have to keep records of phone calls, people you spoke to, recorded letters when you give them x - amount of days to unfreeze your account or you will go down the legal route like above. This isn't just about paypal but the banks and who ever else freezes your account without a valid reason. The excuses given by paypal are pathetic.
 
Jul 14, 2009
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What people should actually do is make a formal complaint with the financial ombudsman or other instances you have in the UK. If enough people start to make a complaint somebody will have to listen. If everybody keeps shut nothing will ever change.
 

Lace

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Mar 21, 2011
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Hi everyone,

A scanned version of the news article is now available for download here: http://TSC.to/qrSx6j

Thank you,

Lace
 
I have a small business in fact I only graduated this year. Paypal first applied a 50% reserve to my account which was to be held for 180 days. Obviously I had to set up a new account in urgency. This new account ran uninterrupted for just under 1 year then Suddenly they applied another 50% reserve. I had a dormant unverified account from a few years back that was linked to an expired bank account. As a last resort I filtered my website payments through this account and requested paypal to deposit funds to confirm a new verified bank account. They never deposited the amounts. I was receiving payments for 2 weeks and then it got limited. 7k had amounted and now paypal was requesting additional info like invoices, proof of address, drivers license etc. I provided all this except 1 or 2 sections which kept rejecting my uploaded documents. I then called paypal to try resolve the incomplete steps. I spoke to their Irish accounts limitation support team who seem to act very serious and sound pissed off all the time. He assured me that my account had been deemed high risk and there ore had been frozen indefinitely. They did not even say 180days, just indefinitely. I was shocked and had not a clue what to do. They literally had all my money! I resorted to refunding customers explaining the problem and asked if they could pay into the business bank account or via google checkout (who are even worse than paypal by the way). Most were very cooperative but I did loose some sales as some may have thought it was a bit suspicious.

So I managed to refund about 3k out but losing sales in the process. I got to the stage where I began refunding customers who already had their goods so it became risky for me.

I had to borrow money from friends to maintain a cash flow. Luckily Moneybookers saved my life but also took some time to set up. I urgently setup a merchant account with the bank.

I have now recovered from the PayPal abuse but they still have £4k held across all my limited accounts which will only be released at the end of January.

I have learnt loads going through this

1. Is to never trust paypal.
2. Never rely solely on paypal to process your payments. Always have a back up plan - First set up a payment processing with the bank via gateway such as Sagepay.

I admit I may have unintentionally and unknowingly push the wrong buttons within paypal but I really do think they are an inconsistent automated law unto themselves who really need their unfair practices brought to light.

The truth is I can prove I own the accounts but they want to know nothing of it.

It is quite ironic how paypal are partners with http://www.startupbritain.org/ yet they actually do the opposite with their practices.
 
May 30, 2005
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Thought I'd update my situation with PayPal and their Reserves.

The first of September they snagged $9,000 from my accounts and told me they were going to hold 10% on a 90 day rolling reserve. I got on the phone and did convince the responsible guy that I work on about a 10% profit and holding 10% would effectively put me out of business. We had quite a conversation, and he admitted there was nothing in my history with them that would trigger alarm. It was just that I had had extensive sales increases and they wanted to be sure I would not also have an increase in claims. He even said my metrics were quite good, if it were not for hitting the threshold he would have never considered me otherwise.

I did manage to get him to drop the rolling reserve to 5%, so while I had to give up Big Macs for Happy Meals, but I was able to carry on.

THEN - SURPRISE! SURPRISE!

On November 28 I got a couple of emails telling me the reserves had been totally released! Pretty cool to have an extra $17k or so just in time for Christmas. Of course, I didn't actually believe it, but it was so, available balance was the only thing that shows, no more how much I have that I can't touch.

So, they do what they say they'll do if you play fair and give them no reason to hold your funds forever. :)
 
May 7, 2007
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Surprise surprise. I spoke the journalist who wrote this piece and none of my info or quotes were used.

Do you know why? Because there were positive. One example being my account being limited in the morning and back online again in the afternoon. Just by sending/facing paperwork over. Also at the time I had issues with a customer and two chargebacks, which paypals business team could not do enough to resolve and offer advice.

Rewind 20 years and only 1% of people here would qualify for a 'customer not present' credit card merchant facility. They were the holy grail to any 'mail order' business. They were not handed out on a plate like sweets. It was easier to get a £1m mortgage working at McDonalds part time than applying for a mail order credit card facility.

Even in them days you were sometimes asked for a 'bond' which could be many may thousands or tens of thousands.

Not to mention paying 2 or 3 grand weekly to reach customers in magazines (no internet and no eBay!!!). But that's a whole different story.

Despite paypals short coming, you really don't know how lucky you are to have a mail order payment facility that is reasonably priced and accessible the same day to joe blogs in his bedroom knocking out old Xbox games.

Remove the website, internet, email, eBay and PayPal from your business and what have most of you actually left with? Count your lucky stars it actually Christmas and your birthday every single day!
 
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PG

Feb 2, 2011
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Surprise surprise. I spoke the journalist who wrote this piece and none of my info or quotes were used.

Do you know why? Because there were positive. One example being my account being limited in the morning and back online again in the afternoon. Just by sending/facing paperwork over. Also at the time I had issues with a customer and two chargebacks, which paypals business team could not do enough to resolve and offer advice.

What? A journo only talked about 1 side of the spectrum??? I dont believe you!:D