How Paypal Freezes and Holds Customer Funds for 180 Days

Millions of people use PayPal for the ease of online transactions despite the high charges levied. However if you happen to encounter a problem with PayPal you could fall into what is termed ‘the PayPal Nightmare.’ Shoddy customer service which sends you on an email trek to India is best avoided by calling the company direct, which it is possible to do as they have now been forced through regulation to provide their telephone numbers.

If you do run into a problem you can surf the net and realise you are not alone. There is a veritable host of websites dedicated to complaints about the company. You could find depressing reading on sites such as pay pal warning, about pay pal, consumer affairs, screw-pay pal, pay pal-talk, pay pal and many more. Pay pal currently has way over 10,000 lawsuits filed against it with more pending.

There is a high level of complaints that PayPal suddenly freeze accounts for no justifiable reason, thus denying their customers access to their own money. Unfortunately this activity is allowable in their terms and conditions and can be implemented if PayPal “have reason to believe that you have engaged in any restricted activities” or if they fancy you may be engaged in a bit of money laundering.

As the company is not a bank it is not governed by banking regulations but chooses to make its own rules. Whilst a bank will forward money on behalf of its customers PayPal prefer to consider that some accounts which receive funds of more than $2,500 in one year are suspicious and deserve investigating. Naturally whilst they investigate they freeze the account.

Despite its millions of customers PayPal isn’t profitable and they can use the funds they freeze to prop up PayPal. Rather alarmingly the terms and conditions of clause 10.2 section a) states “we may, at any time and without liability, suspend, block, limit, close or cancel your account.” They can prevent you from sending and withdrawing your own money.

Clause 10.2 section b) states PayPal can “block your account and/or hold any funds in the reserve account, including, without limitation, for more than 180 days if so required by PayPal.”

Section h) “We may hold your funds for up to 180 days if reasonably needed to protect against the risk of liability.”

Clause 10.5) “you agree that PayPal in its sole discretion can place a hold.”

Be assured that PayPal is freezing the legitimate accounts of regular PayPal users who have done nothing to warrant suspicion and are sent round like lemons expected to provide proof of their legitimacy. The demands which PayPal imposes on its customers are far in excess of details required by banks.

Customers can expect to lose many hours of their time in trying to resolve the problems which PayPal cause, and at their own expense. Frustration and stress are inevitable as customers find access to their own money denied. Those who end up caught in the 180 day trap must wonder if their funds are being used to provide interest for PayPal to use or to pay PayPal’s defence fund against the host of law suits.

If you fall into the ‘PayPal Nightmare’ of having your account frozen, don’t bother with their convoluted email routine which results in yet more ridiculous requests to further confirm yourself to the company. Take the matter up by phone or take legal advice. PayPal is operating on dodgy ground which is emphasised by the number of violations it has itself been fined for in various American states. Louisiana had the right idea when it banned PayPal from operating within the State.

If you do end up with your account frozen and have to wait 180 days to access your money PayPal will be happy to draw your attention to the clause you agreed to in the lengthy terms and conditions you willingly signed. Hopefully the lawsuits will prove that these conditions do now stand up on legal grounds.

Source: PayPal terms and conditions.