Beware of PayPal Locking up Your Account Without Notice

Sorry to hear that ... the same happened to one of my companies a while back and I had over 10K sitting in the Paypal account ... and it took them 4 weeks to resolve the entire process!

It sucked ... I said I would never leave money like that in there again ... and they are now a secondary processor for me ...

Man ... Really sorry to hear that, I feel your pain!

Darin

What a PITA! It seems, however, that once you hit $10K, they pull this bullshit. I know of at least two others who had this happen to them in March, and on a weekend, no less. If I recall, they were given all the same nonsense reasons and it took at least a day to resolve. I believe I heard the number $10K tossed around.

Now I don't know about American banks, but in Canada, if you plan to deposit Cdn$10K in cash in a single transaction, the bank will make you explain where you got that much cash. It seems that PayPal may be doing something similar.

Well, hope you get it resolved soon, as it obviously grinds your ability to operate. I've started using my old PayPal account again as well, though because it's set up to take credit cards, I lose a fee for anything deposited. If you don't have a second account, get one. It's allowed. And maybe if you keep funds split up, you may be less likely to suffer this sort of situation.

Now bite my tongue, but if Google Checkout ever becomes a true competitor to PayPal, watch uot.

I had $23,000 for several months and pulled another $5,000 in to make it $28,000. So in this case it was not $10,000. Maybe $25,000

Well, I guess there's goes that theory. They're almost as tight-lipped as Big G about the "why" of their actions. Hope you get this sorted out soon.

On May 22nd, I reported and article here at Performancing about a company called Bloggerwave from Amsterdam.

In retrospect, I believe that PayPal did the same thing to Bloggerwave that they have done to you. From what I learned after the fact however, Bloggerwave did not respond immediately to an early request for information from PayPal and their account was very very new(just a few months old).

BAD Information about Fraud from PayPal

Bloggerwave had paid me for a small transaction and PayPal ended up reversing the transfer back to Bloggerwave. I called to inquire and PayPal very firmly told me that Bloggerwave had utilized a bank account or credit card fraudulently to fund the PayPal account that paid me.

I took this very seriously and questioned the PayPal rep for a good half hour asking many follow up questions. My law degree focussed in part on Money Laundering and Anti-Money laundering. I did many case studies on PayPal years ago when they were new and their potential for international abuse, plus the reporting requirements at the time(pre 9/11 but getting tougher even then).

The thing was, PayPal gave me bad information, which they later retracted. As it turns out Bloggerwave did nothing fraudulently. At worst they were guilty of failing to respond in a timely manner, which then prompted PayPal to shut down their account and start reversing transactions.

Respond to PayPal immediately
There are many email scams relating to PayPal and we are sometimes almost conditioned to take PayPal notifications or requests for information with a large grain of salt and suspect it first as spam. The reality is that you do have to be careful about spam and phishing attempts, but you also have to be very very on top of your PayPal account and respond immediately.

It sounds like you responded as fast as possible and that is good. I hope you do not fall victim to PayPal providing bad information as to the reason for the hold on your account.

When I first heard from PayPal that Bloggerwave was engaged in fraud, I made sure that I confirmed it with PayPal and ruled out any possible misunderstandings and more. PayPal even referred me to report the incident to the Federal Trade Commission, and ic3. I was in the midst of filing my report when I started to receive communications from Bloggerwave(they didn't respond to my earlier requests for info after I first heard from PayPal about the fraud) that indicated that PayPal might be incorrect. At that time, I had reason to trust PayPal more than bloggerwave and everything I initially heard from Bloggerwave made me even more suspicious. Eventually, I was able to confirm some of Bloggerwave's statements with PayPal which eventually retracted their fraud claims and acted as if that were a small issue not even noteworthy.

PayPal Does not Protect Blogging Transactions

PayPal does not guarantee payments like they do ebay sales. If you sell something on ebay and you ship something for the sale, you can provide tracking information and Ebay will guarantee your payment once you have received it. In the b2b world and the blogosphere, you can create content, provide services all day long, but PayPal will not consider any proof you might provide to show that you delivered services. You have no protection from PayPal if you are paid by someone that is engaged in fraud and you don't learn about it until its too late.

Based on this, I have a strong suspicion that PayPal may soon either have to change its ways or some other company will have to step in to serve as the payment medium of choice on the internet. There are a lot of things I like about PayPal but my trust in them has been significantly shaken over the last 30 days.

Resolved. I sent my driver's license and about 6 hours later they reviewed and opened my account back up. But seriously, this was frustrating and almost motivated me to boycot PayPal.

Hey Ryan,

I'm glad you have it straightened out. I forgot to mention that it seems to me from my experience mentioned above that PayPal has a bit of a bias against non-Americans. I do not think its a personal thing, but something driven by Anti-Money Laundering laws and treaties under the OECD.

I think in some areas too Americans get a bit of a break through PayPal due to the prevalence of Credit Reporting structures in the US. This also helps parts of Western Europe, but there are several regions of the world where there is no similar institution, which makes it difficult for PayPal or any world wide financial institution to verify a person's identity.

Funny you say that Brett because the only people I know that have undergone this account locking by PayPal ARE Americans. There may be others, but I haven't met them. But yeah, it could very likely have to do with Anti-Money Laundering practices. That's why it's done for Canadian banks, for cash deposits of $10K+

I'm an American. But I've been doing a lot of transactions with non-Americans lately.

In the US, the hard and fast rule used to be at $10k for anything. (make a bank deposit with cash, buy a car etc.)

Then they made some changes, think of it like an algorithm. Now banks get triggers at different points depending on the combination of events, which can include dollar totals, such as two payments one for $2k and one for $3k, etc.

Many of the G8 countries do benchmark off of each other because they are following OECD guidelines or recommendations, plus there is often similarity based on cooperative treaties. So a bank may have to conform to Canadian law in one instance, but might also have to conform to a stricter requirement when dealing with an American bank on another side of the transaction.

And then you have Belize.

elo everybody..
how to get a pay pal account.do i need a credit card to apply for it? if i don't have one, is it possible for me to apply?

I know that banks have some very sophisticated anti-fraud tracking systems for tracking credit card fraud.

For example, if you're an 80 year old lady, and suddenly use your credit card to buy a pair of super-flash Nikes in the baddest part of town, they'll pick it up and look more closely.

You say that you've been making a lot of foreign transactions recently (presumably hiring freelancers?), and so this will have significantly changed your profile. I wouldn't be surprised if this is what flagged your account up for review.

Having said that, the system is still crude and perfectly honest transactions can seem suspicious. To use the example of the 80 year old lady again - who is to say she wasn't buying them as a birthday gift for her grandson?

It's why banks (and paypal!) need to combine their significant investment in anti-fraud profiling software with an equally, if not more, significant investment in human personnel who can manaully review accounts, and who can exercise sound judgement.

I am in the UK, I have been locked out of my PayPal for 8 days now due to reasons already mentioned here, I have done everything they have asked and all they say is it is in Review, I phoned them it took 20 minutes for a human to come on and after another 15 minutes an Indian lady who I could not understand and had me on hold for ages said "thank you for calling PayPal" and hung up, I phoned back and after 15 minutes got an answer and after another 10 minutes told
"your account is in review it will be dealt with when it is dealt with. Thank you for calling PayPal have a nice day" and hung up,
I am at a loss, I am pulling my hair out, this is my living they are messing with.

Just waiting because phoneing does no good.

banks Please Please Please create a system to substitute PayPal, they obviously can not coup with the responsibility that has developed on them over the years.