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Paypal Policy - A License To Steal Your Money

Updated on August 27, 2011


If you use Paypal or if you are thinking of using Paypal to process online payments for your eBay items or your website, there are some things you need to know. We will explain some of the common concerns that Paypal users are faced with, and the things that most Paypal users do not even realize. These are issues that you will not want to learn the hard way, and these are the things that eBay and Paypal are not going to tell you. You don't want to wake up one morning and find that your Paypal account is limited and you are out thousands of dollars. We will explain to you the risks of using Paypal for buying or selling. We will also try to help you avoid unnecessary problems with your eBay and Paypal accounts.

PAYPAL 21 DAY HOLD POLICY - A few years ago Paypal introduced the 21 day hold policy for eBay items. At first glance this seems like it might be an excellent method to reduce fraud and make eBay a safer place. Paypal will hold your money until you can provide proof of delivery, or the buyer leaves positive feedback indicating they received the item, or 21 days passes without any complaints from the buyer. Now with this policy it would make it almost impossible for anything to go wrong.As a seller you have to be very careful, if you begin selling your products, shipping them out and waiting for the 21 day hold to clear, you will surely become dependant on that money. You never want to depend on any money from Paypal because at any point they can seize your funds and limit your account.

Some sellers overextend themselves by spending money out of their pocket to send eBay items before they have received payment, because they are confident they will get the money in 21 days.

Unfortunately in some cases, after the 21 day period is up, the customers have received the items and left positive feedback for their eBay items, when the seller tries to withdraw the available funds, they are shocked when their account is limited. What does this mean? For some sellers this means that the money they have desperately been waiting for is held for 180 days.

- Now I am guessing that most people that use Paypal have no Idea that Paypal can seize all their funds and hold them for 180 days. Well the sad truth is that this happens all the time, and it could happen to you! Paypal can limit your account for any reason at any time, and most of the time they don't even tell you what the reason for this is. In some cases they will ask for a mountain of paperwork in order for you to clear up the holds on your funds.The best case scenario is that after several weeks or even months of exhcanging emails, sending faxes and long distance telephone converstations that finally they might release your money. In other cases they will leave you with no opportunity to provide any evidence or information, and you will simply have to wait 6 months for your money.

One of the most common reasons for an account to be limited is that somehow the account is linked to another suspended account. This can happen if you log into your Paypal account using a computer that was previously used by another Paypal user, or using the same IP address at a wireless Internet location. You should never sign into your Paypal account using any computer other than your own personal computer. Another reason that your account might be limited is high sales volume or a sudden spike in sales. In order to minimize the risk you can avoid using public computers and keep your sales volume low and gradually increase it slowly. Of course you will always be at risk of limitation and there is no sure way to avoid this.

- Paypal has convinced many people that they are always safe when they use Paypal to purchase item from eBay or other online marketplaces. They have advertisements that say "Paypal has got you covered". What people don't know, is that Paypal doesn't really pay you out of their own pocket if you have been ripped off on eBay or another website. Paypal will do their best to recover the funds from the seller, but if the seller has no money in their Paypal account, they will just tell you that they are sorry! Ironically Paypal holds funds from users for 180 days, however they only allow claims for 45 days after the purchase. So the question is, what do the do with this money for 180 days? Well the answer is .. they profit from it.

CONFLICT OF INTEREST - Nobody knows for certain how much money Paypal actually makes from funds held as part of their 180 day hold policy, but I think we can all agree that they will profit from it. Now if they make money by limiting accounts, it would seem like there is a conflict of interest. Do they really have an interest in creating a safe trading environment, or do they just seize as much money as they can because it is profitable for them? It should not be legal for Paypal to hold funds from transactions where the items have been delivered and proof of delivery is provided.

*UPDATE*: JAN, 2011- In the past it was assumed that after 180 days Paypal would release the money in any limited account. Recently we have had an account with a balance of several thousand dollars limited for more than 200 days. We received an email from Paypal after 180 days that notified us our funds were eligible for withdrawal, when we attempted to withdraw our funds the account was locked, and the withdrawal was reversed. These funds remain with Paypal, and it is unclear if they will ever be recovered. It seems that Paypal really is stealing our money!

So after several emails to Paypal, we finally got this response:

Dear ######,

As part of our commitment to offering a safe transaction network for all of
our valued members, we regularly screen account activity. During one of
these screenings, we reviewed your account and determined that the activity
associated to your eBay or PayPal accounts poses an inherent risk to the
overall security of our network. Unfortunately, due to this risk, we have
determined that we are no longer able to offer the use of our services to

Although you are no longer able to utilize PayPal services, you may still
log into your PayPal account to review the information associated to your
use of our services for a limited time.

In accordance with PayPal s User Agreement, the balance of your PayPal
account will be held for 180 days to protect PayPal against the risk of
reversal stemming from buyer claims, chargebacks, or other reversal rights
that may have been assigned to a consumer outside of PayPal and eBay s
policies. After the180-day period has passed, any remaining funds will be
available to you for withdrawal, less any additional amounts owed to PayPal
or eBay.

Additionally, eBay will charge any amounts you have not previously disputed
to the billing method currently on file and you will be credited for any
listings that were ended.

While we regret having to make this decision, please understand that the
decision was based on criteria set forth in the User Agreements for both
PayPal and eBay. You can view our User Agreements in their entirety by
using links located at the footer of each of our websites.

Please do not reply to this email, as this mailbox is not monitored and you
will not receive a response. If you seek further clarification regarding
your account access, please contact PayPal by visiting the Help Center and
clicking "Contact Us.

We thank you for your prompt attention and cooperation with this matter.


Account Review Department
Forward Message

What does this mean? Well our account has already been limited for over 180 days, we already received notification that our funds were eligible for withdrawal, and then our withdrawal was reversed. Now we simply do not understand what paypal is telling us? Are they asking us to wait another 180 days? Or more than likely they did not even read our emails and this reply means absolutely nothing. Meanwhile.. our money is with paypal ..

UPDATE, FEB 24, 2011

After sending more than 50 emails to Paypal and getting only an automated reply, I finally got a human response. The customer service rep told me that the situation would be taken care of within 48 hrs. Today I finally got the email saying that my funds are available for withdrawal. So after more than 8 months, I finally got my money back.

Live conversation with Paypal employee


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    • profile image

      Jim 4 years ago

      they keep our money until the day we passed out, and going to luxembourg and kill the presidente of paypal, and some more "figures"..

    • noenhulk profile image

      noenhulk 5 years ago

      I also have stopped paypal payment for my ebay transaction... whew! glad to learn about this. Thanks for sharing.

    • Man from Modesto profile image

      Man from Modesto 5 years ago from Kiev, Ukraine (formerly Modesto, California)

      Looks like the moral of the story is: don't keep a high balance in your PP account; there is a risk of seizure.

      Diana Grant: When money moves slowly, businessmen don't have use of their funds to invest in product. The more and varied a seller's product base, the greater the sales. When banks delay funds for "2 to 3 days", it is to keep the bank's cashflow high. It legalizes them to loan more money. Effectively, the bank uses the money for profit, not the account holder.

      Banks make billions on the standard 2 day delay.

      PayPal now has their own credit card. How are they establishing their cash holdings to legally loan greater amounts? Most likely, same as banks, by delaying payments.

      Personally, PayPal has been great for me. It saves me money over using bank wires. And, they recovered money for me on a bogus book sale. PP refunded my money- not by dipping into the seller's PP account, as written above, but by extracting it from the seller's actual bank account.

      I'll continue using the service.

    • profile image

      Jon 5 years ago

      PayPal locked our account for 180 days with over $16K sitting in there because our domain name "sounds like" some other company listed in a lawsuit in another state, that is obviously not us. The PayPal rep said that his decision was final and we did not need to talk with his supervisor.

    • noenhulk profile image

      noenhulk 5 years ago

      Altho I do not have terrible experience yet in ebay, I will be wary using paypal for my products from now on. Wew! thanks for sharing this.

    • profile image

      uknowimright 5 years ago

      Next time anyone has this issue with Paypal, call your state's financial regulatory agency AND your attorney general's office. Any business operating as a financial institution on any level MUST follow that state's rules. DO NOT PLAY Paypal's little game. Are you aware that this is actually illegal? People have been so utterly brainwashed by the power held by US corporations that they are willing to go along with just about anything these days. Take my advice and know your RIGHTS!

    • thebestyou profile image

      thebestyou 5 years ago

      Paypal stole over 4000.00 from me! Read my page. They need to be shut down

    • profile image
      Author 5 years ago from Vancouver / Bangkok


      I regret to inform you that this paypal 21 day hold you are experiencing now.. is nothing compared to what some people have to deal with. They can seize all you money and hold it for 180 days, without giving anymore reason that they have already given you for holding your funds for 21 days. I reckon if you get your money after 21 days .. you are doing well ...

    • profile image

      Larry 5 years ago


      I received an email today indicating that money received will be held for 21 days, unless I provide a tracking number and receive positive feedback, from ebay buyer.

      The email basically claims that due to high risk activity, they need to implement this practice.

      I called PayPal and was told that because I do not sell a lot of merchandise and the categories I sell in (toys and consumer electronics), my account has this restriction.

      I explained that I do not sell many items on Ebay (2-3 in last year) and that I mainly use PayPal for billing IT work. Additionally, my Ebay account has 100% positive feedback.

      After listening to the representative, who as very nice and professional, there is only ONE way for me to have this hold lifted, which I personally think is a way to drive the EBAY business.

      Here is what I have to do:

      1) Sell MORE items on Ebay (As mentioned, I don't sell there often)

      2) Provide tracking numbers, etc.

      3) Basically have no issues with the transactions - no disputes / chargebacks (which I have never had)

      So, basically, the ONLY way I can get a hold lifted on the account is to engage in MORE of the activity that they deemed to be risky.

      This is nothing more than a complete on total scam. I am going to all relevant information to my local newspaper and hopefully create a firestorm.

      BY the way, the paypal rep was very willing to compare their service to Amazon's. According to the PayPal rep, Amazon holds ALL money for 21 days.

      It is my opinion that a class action lawsuit is in order against both PayPal and Amazon. They are holding money, with which they are certainly going to receive interest, and then giving the money after 21 days.


    • Diana Grant profile image

      Diana Grant 6 years ago from London

      At least whilst there is a recession you are not losing as much interest on your withheld funds as you would be in more normal times! They must make vast profits out of holding countless customers' funds for 6 months and not paying them any interest. No doubt the funds are held in an interest-paying bank account, with Paypal retaining the interest for their own benefit. But then they never proclaimed that they were running a charity - this is what capitalism is all about.

    • Jlava73 profile image

      Jennifer Vasconcelos 6 years ago from Cyberspace and My Own World

      It is worse than I thought. I just stopped using paypal for my ebay account.

    • profile image

      govinda 6 years ago

      It seems that if your balance is more than 1000$ they will limit you and demand all needed documents.SO DON'T KEEP there more than 1000-1500$.

      I had same situation but luckely I solved it on phone within 30 min...

    • profile image
      Author 6 years ago from Vancouver / Bangkok

      Thank you Kabatzas, I appreciate the info!

    • profile image

      kabatzas 6 years ago

      This is not normal! it is probably due to a paypal system problem. as for the reply they gave you on the phone it was probably someone powerless to make any change to the status of the acount and just wanted to finish the conversation and get another call so he can meet his target call volume for the day.

      There is no mention af any additional 180 day hold anywhere in the user they are actually in breach of their own policy if they keep the money addditional days.

      Phone them again and insist to talk to somebody with authority to change the status of the account.

    • profile image
      Author 6 years ago from Vancouver / Bangkok


      Please offer us as much info as you can regarding this situation. I have never heard of this before. Keep us informed and we will let you know if there is anything we can do.

    • profile image

      Ames 6 years ago

      After 180 days, per telephone conv with paypal - they claim 180 addtl hold days necessary!

    • profile image
      Author 7 years ago from Vancouver / Bangkok

      Surfer .. Please explain ?

    • profile image

      Surfer 7 years ago

      Hello, you need to apply "dates" to these articles. Thank you.