If you are a new seller on eBay or a recent entrepreneur that had just started their business online, chances are PayPal will put a 21 day hold on your profit from you for security reasons. Their reasons behind this are actually very logical. PayPal puts a hold on your assets in order to avoid scammers from making money from their consumers. PayPal will not charge you any extra to ship the items. In fact, the cost of shipping will be covered by PayPal and will later be deducted from your payment hold.
After a while, PayPal will stop putting holds on your transactions. If they feel that you are in fact a legitimate dealer online, they will cease to put payment holds on your transactions.
The legality of this type of practice is very legal and very legitimate. PayPal puts these holds on sellers to block out any potential scammers or shady businessmen. This type of practice is a way to keep both PayPal safe and keep buyers safe. If a transaction is held for a period of time, the seller will not be able to withdraw the money or spend it in anyway. This keeps PayPal safe in the event that the buyer wants a refund or files a dispute with the seller. If this happens, the seller will have no chance of withdrawing the money and getting away with it. With a payment hold, the seller will have no choice but to refund the buyer if they lose the case. In all actuality, this is more like a trust system between PayPal and the sellers. If the sellers gain enough trust from PayPal, they will get more benefits and hopefully have no more PayPal holds on their transactions.
Everyone faces these payment holds. There have been a select few that believe this is unjust, but in actuality PayPal is not taking your money. They are just holding onto it until both sides of the transaction are happy. I believe that PayPal should do this for all transactions no matter how many transactions the seller has conducted. This keeps the buying and selling on PayPal very safe and very secure for both buyers and sellers.
If you have a transaction that was placed on hold by PayPal, do not panic. Chances are you are just a new seller and PayPal needs to find trust in you. Payment holds are not bad. They do not do them because you are a shady businessman. They only do this to protect buyers and themselves, and in some way, protect sellers too. If you have a payment hold put on your account, do not worry. Just wait until the account hold is taken off and take your money.