Paypal Hijinks
Last night I received an email from Paypal that first made my blood run cold, and then made it boil over. As a seller on both Etsy.com and Ebay, I use Paypal to accept credit card payments from buyers. This is a practice that makes things convenient for the buyer and myself. I accepted that I would, of course have to pay the credit card fees, that's a no brainer.
I have used Paypal for years for sending and receiving payments, with no problems. I do not transfer the money from the Paypal account, because it is mostly put back into the business for supplies, fees and advertising. All done without issue for years. Until recently.
In July I had a large run of sales in my shop. After that burst, my business returned to the usual trickle. As I had funds in my Paypal account that I needed for personal use, I applied for and received the Paypal debit card. I believe that this is why my account suddenly came under scrutiny. A month after receiving the debit card, I received the following email -
Dear ____________
An explanation of payment holds and how they apply to you
Your business is important to us. That's why we're committed to providing a fast and secure payment service to you and your customers while keeping our prices competitive. We're also committed to clearly communicating changes to our policies and procedures. So, we're writing to let you know about a change to your PayPal account.
From now on, payments you receive will be temporarily held in a pending balance. This pending balance helps make sure that you'll have enough money in your account to cover any buyer claims.
Payments will be held in a pending balance for up to 21 days. For example, if you receive a $100 payment (after fees), the $100 will be held in a pending balance for up to 21 days. After 21 days, the money will be available for withdrawal.
The money may be released sooner if:
We can confirm that the item was delivered
Your buyer leaves positive feedback. (Applies only to eBay items.)
We know this is a change in the way we do business with you and we hope you understand that you haven't done anything wrong. In deciding whether to apply payment holds, we review many factors including transaction activity, business type, and customer disputes.
Payment holds are often applied to new sellers who don't have a lot of transaction history, sellers in traditionally high risk industries (for example, travel or tickets), or sellers who've had a high number of claims filed against them.
If you're a PayPal Money Market Fund customer, you'll continue to earn interest on the total balance while your money is held.
To learn more about this policy change, please read our latest funds availability policy
We appreciate your business and look forward to a continued partnership. Don't hesitate to contact us with any questions.
Thanks,
PayPal
Now, I understand policies and procedures, and their right to enact these things. However, after years without anything like this, to have this particular policy applied to my account is both an insult and an eye-opener.
According to the Paypal website, these are the possible reasons for this action-
Though we can't include every reason your account may have been affected here, here are some common reasons:
You have limited history or selling activity with eBay and PayPal
You have low Detailed Seller Ratings, negative Feedback or other indication of below-standard performance on eBay
You have a high rate of customer refunds, disputes, claims or chargebacks
You're selling in a high risk category or industry such as, but not limited to, tickets, travel, gift certificates, computers, consumer electronics, or cell phones
Your business or selling activity is inconsistent. For example, you have a spike in selling activity, your average selling price changes, or you started selling in a new category without an established history in that category
The account information you have provided is incomplete or inaccurate, or we're uncertain with the information you've provided
Your withdrawal activity has changed
I have interpreted from this list that because I had a good run of business for a short period, and had the nerve to actually use some of my money, my account was targeted as suspect. I have not had any disputes or claims made against me, so it would appear that because my sales are inconsistent, I am suspect.
I have researched this. And there are hundreds and thousands of posts all over the internet of people who have had the same issue or worse. The biggest sets of horror stories can be found on http://www.paypalsucks.com/ and http://www.consumeraffairs.com/online/paypal_02.html, and look at the various comments made in numerous blogs here- http://money.cnn.com/2008/02/08/smbusiness/paypal_funds_freeze.fsb/index.htm. This blog in particular outlines a similar story, and illustrates beautifully just how much money Paypal stands to make off of the people that use this policy against - http://www.cowbellyblog.com/2010/06/18/the-truth-about-paypal-paypal-class-action-lawsuit-may-2010/
This has apparently been going on for years, with a class action suit filed way back in 2004. And even though it has been a widespread epidemic, there is very little that can be done about it, as Paypal has a monopoly of sorts.
The recommendations I've seen, in case you are having the same issue or similar, is to make your story public, by posting on one of the above sites, filing a complaint with your Secretary of State, and get in touch with the attorneys Freed & Weiss in Chicago-- http://www.freedweiss.com/ - who have filed a class action suit against Paypal and Ebay for this very thing. According to the things I have been reading, filing a complaint with Paypal itself will get you nowhere, as their customer service is notoriously absent.
What bothers me most about this sudden action against me, is that Paypal is now, in effect, holding my money hostage. After reading all the horror stories, I'm pretty sure that if I try to remove the money from my account, they will take action by freezing the account or putting an outrageous hold on it. As this business is the only source of income I have at the moment, and the money I have earned and left in my Paypal account is necessary for my near future, this is extremely troubling and stressful. I have to either leave the money there, or try to transfer the money out, which could result in the funds being tied up for months, or future issues with Paypal.
Life is stressful enough as it is. Running a business, even more so. And when you have to start worrying about your income randomly not being available when you need it, it make one wonder if internet business is even worth the effort.