“Is PayPal good for your microISV business?” A short PayPal horror story

Dec 18 Update: This morning I was contacted by a PayPal manager from their fraud department who talked with me close to an hour. He went out of his way to apologize for their mishandle of my case. He told me that my account was initially so severely limited because in early October there were several attempted transfers that were marked as possible fraud. In fact, these attempts were my own attempts to fund the PayPal account using my own credit card by requesting money from myself. I needed the funds in order to perform a mass payment which is only possible if there are money in PayPal’s account. And I can’t fund my PayPal account from the bank in my country. I told the manager that these were my own attempts to fund the account and these are in fact my own credit cards and there was no attempted fraud there. But, according to him, when my account’s activity rose because of MacGraPhoto sale, the system took these funding attempts as additional fraud factor.

He later told me that all the representatives to whom I talked didn’t act professionally and didn’t perform the needed due diligence on my account to see that these funding attempts were one of the sources of the limitations. It made sense when we talked on the phone but now I’m not sure how it’s connected to their inability to understand that my business is legitimate. The original source of the limitation doesn’t explain their failure at investigating the case. He told me that it was very easy for him to see that the business was legitimate, since I’m active on social media, have LinkedIn, twitter an Facebook accounts, all of which are supporting my identity as Mac developer. Also, he admitted that it was easy to find info on MacGraPhoto promotion since it was quite well covered by the blogosphere, and even an interview with me on Ars Technica about it.

Eventually, he lifted all limitation from my account and dismissed the October cases of my funding, which were marked as fraud. Of course we’re very glad that our funds are now unfrozen but it still doesn’t clear PayPal of their mishandling of our case. For example, where the representative told me that she escalated my issue to the fraud department, she lied. There was no escalation. It looks like nobody has taken any serious look into whatever faxes that I sent because anyone with half a brain and 10 minutes of time could have found on the net all he wanted about me, my business, this specific sale and our partners in the bundle. I wrote it all on the first page of the fax, including the PayPal account emails of our partners, whom they could simply call.

End of Dec 18 Update. Original article below.

I’m running my Mac indie software business for more than 3 years now. For the first 2.5 years all my sales went through Kagi and later I decided to switch to PayPal. The sales were not high, PayPal worked well and all was good.

This year, me and my partner Kosta decided to do some creative marketing for our application, ImageFramer. We decided to partner with several other developers of graphics software for the Mac and to sell all the software together, as a bundle, for 2 weeks. After months of preparations, negotiations and development, finally, MacGraPhoto bundle was launched on Nov 16.

We, at Apparent Software, were responsible for all the execution of the sale and part of it included handling all the money related issues, such as collecting the payments and distributing to other developers their shares. There were 6 other developers in addition to us. We corresponded over email, sent them a Terms and Conditions document and got their agreement to it by email.

We chose PayPal as our payment processor for several reasons but the main were low fees, the fact that we already knew how to integrate it to the sales backend and that it should be easy to pay them and to affiliates. We used our regular PayPal account, which we used for regular sales. We didn’t expect what happened next.

The launch was successful and we were pleased with how the sales progressed in the first days. Three days into the sale I’ve got a phone call from PayPal and the person on the other side asked me about nature of the spike in account activity. I explained that we had a 2 week sale, a special promotion and it looked like the call went fine.

The next day, without any warning, I get an email from PayPal that states, among other:

We have observed activity in this account that is unusual or potentially
high risk.

For your protection, we have limited access to your account until
additional security measures can be completed. We apologize for any
inconvenience this may cause.

I log into my PayPal account and what do I see? “For my protection” they have limited the ability of my account to withdraw or send money but most severely, they also disallowed the account to receive payments!


Frantically, I go to MacGraPhoto’s buy page, click buy and see a message “The seller can’t receive payments at this time”. At about the same time I get an email from a potential customer that says that he can’t buy the bundle. In the server log I see other people trying buy the bundle and leaving. Lost sales. Not good. Not good at all.

My PayPal’s page lists lots of things that I need to provide to PayPal regarding my personal identity and regarding the sales. Some requests are totally not relevant to the case or to our business.

Luckily, I have a partner in this business. He also has a personal PayPal account which he uses to buy things. We quickly convert it to business account and modify the system to use it instead. Total downtime of our ability to sell was above an hour. Luckily, this happened when I was near the computer and not during the night or we’d have long hours of downtime and thousands of dollars in lost sales, possibly ruining the whole operation because of lost trust.

I quickly send some Photo ID of myself to PayPal and call their customer support. After fighting for some time with their voice routing system (I mostly lost) I finally got to an “agent” who verified my identity and then transferred my call to a “Limitation Specialist”.

We talked about the nature of the business. They wanted to see some shipping confirmation and tracking numbers. I explained that we’re selling downloadable software and the “shipment” is actually an email with license codes. I also explain that it’s a 2 week promotion where we bundled with some other developers for a mutual sale. She then asks me to fax to her signed agreements that they, the developers, allow me to sell their software. I tell her that we only have email correspondence and she says ok, fax it.

I prepare a fax with our terms and conditions document, 6 email correspondences where other participants agree to the terms and also, in the first page, explain the whole issue of the bundle sale. Total of 26 pages. It takes almost a day to see the faxes in the system. Finally on Nov 22 I get an email that they’ve received the documents.

I call back customer support, finally get another “limitations specialist” who checks the faxes and says me that it looks ok but I’ll have to wait to get my answers over the email in the next 48 hours.

After 24 hours I receive an email that includes:

- Please provide a letter of authority from the original copyright owner
and copy of the licensing agreement which states you have the authority to
duplicate and distribute the product.

That’s exactly what I sent in the faxes, though. All six developers agreed by an email and trusted us and our email conversation to collect thousands of dollars worth of their share of the sales. Apparently, what’s good for all sides of the deal is not good for PayPal, who are only the means to transfer the money.

I call back PayPal support and talk to another “specialist”. I explain the whole sale issue anew and tell that the first “specialist” told me that the faxes were ok. Now this one tells me that no, email doesn’t count, I’ll have to fax real signed papers. I explain that we didn’t do these. It doesn’t help.

In the process of our talk I also learn that these “specialists” are not actually the people who decide to accept or reject the documents. They are only phone support personnel who understand a little more in the whole limitation process. And, it’s totally impossible to directly talk to the people who actually decide. So, it’s like a broken phone anyway.

I ask the person to reconsider our previous documents and tell him that we started to collect signatures (we indeed emailed the 6 developers by this time and asked them to print and sign a one-page, three sentences paper about the bundle). He said ok. Wait another day or two.

During the day we collect most of the signatures and then I receive another email from PayPal. The subject was new: “PayPal appeal denied”. The content:

"... After reviewing your account, we have decided to close it because of security issues.
We are making every effort to minimize any disruption to your business....
Disbursement options
Option 1. If you owe refunds to any of your buyers, you can use the money
in your PayPal account to refund them....
Option 2. Money in your PayPal account will be held for 180 days. After 180
days, we'll email you information on how to receive your funds.
We regret any inconvenience this may cause"

So, now the money (most of which is not even ours but of our bundle members) is held for 6 months. Sure, they are “making every effort to minimize any disruption to your business”. Sure, no disruption at all.

I call PayPal again, get yet another “specialist” who tells me to fax the signed agreements when I have them. Next morning we finally get all the signatures, I prepare a fax and send it. A day later I get an email that they’ve received the documents. I call support again. Ok, got your documents. Wait up to “48 hours” again.

In the meantime, we’ve got really scared that the second account could be limited at any time as well, so as fast as we’ve got a bit of significant amount of money, we’d send it all to some of our 6 partners for a part of the sales.

I’ve got no response after 2 and even 3 days. I call again, another specialist tells me that since my account is kind of closed, she’ll escalate the issue to fraud department. Expect a reply within 72 hours.

Within these 72 hours, Kosta’s PayPal account was also limited. But luckily for us, they still allowed the account to receive money, so at least we could continue to sell. There were still several days until the end of the sale. But we couldn’t pay to our partners now. And we didn’t have a 3rd PayPal account we could use for the sales. Had they also closed Kosta’s account to receive money, we’d have no choice but to close the bundle sale before its promised time, thus bearing a lot of financial and trust loss.

So Kosta started to work on lifting the limitation from his account. They asked him for a lot of things that they didn’t ask me. But at first they didn’t ask him to send “license to sell” other software. In short, after about a week, lots of calls to support and faxes they actually removed the limitation from his account. This happened after the bundle sale finished and we needed to pay our partners soon. We still didn’t have all the money to pay them since a large sun lays frozen in my account.

Needless to say, I didn’t get any response not after 72 hours and not after a week. I called support again and was told that they won’t respond me because my appeal was denied and they don’t reopen cases. I wondered why the previous 2 times that I called they did tell me to send the documents. What happened to the “escalation”? But talking to them was like talking to a brick wall. “PayPal decided that it doesn’t want to do any more business with you” was their standard response.

So, the bundle was a great and a successful marketing experiment. We had to add from our own money to pay the developers and now won’t see our money from it until end of May. Moreover, my PayPal account will stay forever limited and I won’t be able to use it for anything, even to pay for the services we use. And since my credit cards and bank account are also linked to this PayPal account, I can’t buy from any PayPal seller using them (I mean paying with credit card through PayPal, without account). I now either need to apply for a new credit card or don’t buy from people who only have PayPal as their payment option. And it’s not that I need another credit card in my life now only for this.

During one of my support calls I asked the “specialist” if there was any way I could have prevented my account from being limited because of the higher transaction rate. For example, perhaps I could contact them and notify in advance of the upcoming sale. The answer was a definitive NO. You get it? I did nothing wrong. That’s just how their system works.

Even though Kosta’s PayPal account was “clean” for now we decided to leave PayPal as our payment processor at Apparent Software and moved to FastSpring. They have higher fees but at least they have great and personal customer service and we hope they won’t freeze our ability to do business without any reason, “for our protection”. We’ll also have to look for another solution for MacGraPhoto 2.

Summing this long story I want to say that I’m totally shocked about how PayPal treats its customers. Sellers are those who pay the fees and who make PayPal the business it is. I won’t be using PayPal to sell anything from now. They have grown too big to be efficient and caring for their customers. Quick to make totally disruptive decisions and to dismiss legitimate businesses without really taking a look at what it is.

They took the liberty to totally halt our business, to cause lots of lost sales and a major cash flow blow only because we got successful with one promotion, after being their customers for a long time. Right, they “regret any inconvenience this may cause”. They are “making every effort to minimize any disruption to your business”.

If you’re selling anything and use PayPal as your only payment option, I urge you to reconsider. They can cut your oxygen supply right at peak of your success, of course “for your own protection”.

Jacob Gorban.
Apparent Software.

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192 Responses to ““Is PayPal good for your microISV business?” A short PayPal horror story”

  1. Tweets that mention Apparent Software blog » Blog Archive » “Is PayPal good for your microISV business?” A short PayPal horror story -- Topsy.com Says:

    […] This post was mentioned on Twitter by Mitch Olson, Jacob Gorban. Jacob Gorban said: “Is PayPal good for your microISV business?” – A short PayPal horror story. From my own experience: http://bit.ly/4vVV8Z. […]

  2. Aleksandar Says:

    Wow, this is really scary read. As one of the buyers for this good software, I really hope you’ll eventually get the money as I certainly don’t want it to stay with PayPal.

  3. Andy Brice Says:

    I am glad to hear that they are trying to stop fraud. But their ‘process’ for doing so seems totally broken. It just goes to show that you should always have at least 1 backup payment processor.

  4. SimpleLeap Software Says:

    Man, that really sux. I cannot believe PayPal pulled crap like that. From my understanding of your experience, it seems like PayPal is an inadequate system for conducting business, as any business will see spikes of sales from time to time. It’s amazing that it’s hard for them to believe that maybe, sales numbers can grow and shrink exponentially, whether it be from a product launch, sale etc.

    Thanks for sharing your unfortunate experience with the world, and hopefully it educates other users to NOT use PayPal in the future. Btw, you’ll like FastSpring, awesome company.

  5. Goran Radulovic Says:

    My partner and I are selling software through one payment processor (i will not disclose their name) and we are not satisfied with their service, so we are considering PayPal due to lower fees and better service. After reading this email, i think we’ll drop that choice and opt for either FastSpring or Avangate.

    Thank you for this sincere blog entry, it has helped us a lot

  6. stofke Says:

    I had a similar experience and I strongly advice all business to stop using Paypal, read their terms of service first and notice how they can pretty much do with your money what they want including withdrawing money already on your bankaccount !

    They use software to detect spikes of sales and if detected autolock it, support has no power to unlock your frozen money calling them is a waste of time and energy. You need to escalate the issue to someone higher in command at Paypal. That was how I had my money released.

    Their fraud detection system works good but support has no procedures in place for handling exceptions nor the power to do something about it.

    Please do not use PayPal, you will loose some sales & pay more overhead costs because of this decision but the few sales, you loose do not stack up against the trouble with PayPal.

  7. Experienced Says:

    There are literally thousands upon thousands of horror stories like this on the internet.

    The problem is PayPal is TOTALLY geared towards the payers, not the business.

    Every single one of their policies is slanted in the favor of the payers, regardless of how unfair it is to the business or how much it screws the business over.

    You shouldn’t DEFINITELY should not use PayPal if you are selling non-tangible goods like software.

    They changed their previously semi unfair arbitration policies to ones that are completely ridiculous.

    Now, if you are selling non tangible goods and using PayPal, you re basically screwed in any kind of arbitration or pay dispute…

    PayPal will basically automatically find in favor of the payer.

    So if someone buys your software, downloads it, etc and pays via PayPal…they can later make pretty much any claim like “this is not what I ordered”…or “They never gave it to me” etc

    ..and PayPal will just refund their money, and you will basically have no recourse.

    Many many people have been screwed selling stuff like MMORPG acounts this way.

    I have a friend who sold an account to someone and they paid him via PayPal…later the person claimed that the account was not as listed (it was) and PayPal refunded them the 200$ they paid.

    No matter how much proof my friend offered that the account was as listed, and that the buyer received the account, PayPal did not care.

    Even if you sell physical items, all of their processes are basically geared to the payer.

    The reason is obvious, they figure their “real” customers are the people who buy stuff via PayPal…and as long as they keep people buying via PayPal they make money…so they suck up to the payers as much as possible, even if it’s patently unjust.

    There are several things we need to do to fix this:

    1)Let PayPal know that we are aware of their unjust practices.

    2)Let others know about PayPal’s unjust practice

    3)Do no use PayPal to process payments, let them know this and why. Let your customers know why you are not using PayPal

    4)Do not buy from business that only use PayPal to process payments, let them know you are not buying and why.

    If we all work together, we can force PayPal to start treating business fairly…or we can supplant their monopoly on internet payment processors.

  8. Experienced Says:

    Check out http://www.paypalsucks.com for more info (Im not affiliated with them in any way)

    Here’s a quick example of ONE of the times they screwed me over.

    One day a casual friend asked me if I had a PayPal account.

    I said yes, and he asked me if he could PayPal me money, and once it showed up in my account, PayPal it back to him.

    He had a reasonable sounding reason for this, and I figured as long as it shows up in my account, it shouldn’t be a problem. So I did it.

    He PayPal’d me 400$ and it showed up in my account right away…and I PayPal’d it back.

    A few days later I check my PayPal balance, and it was -400$.

    What I didn’t realize was, he was taking advantage of a loophole where, even though he had 0$ in his account, he could PayPal me 400$ and have it show up in my account right away…and then once I PayPal’d it back it showed up in his account right away.

    PayPal explained this to me when I called.

    Ok, that’s all well and good I told them, but why is MY account in the red?

    This dispute was rightfully between PayPal and him, I had nothing to do with it.

    400$ was transferred into my account, then transferred out….so my account should be balanced.

    It’s not my fault they decide to make funds available to people right away….he sent me money, and according to them it was available…it did not say “pending” or anything like that. I sent it back right away.

    Anyway, he was the one who sent the original payment with his account at 0, so it was clearly him they had an issue with.

    This whole time PayPal REFUSED to work with me…

    They strategy was basically to make my and his account negative and threaten both of us.

    They really didn’t care what happened, they just wanted their money.

    The worst thing though was, the entire time they treated me like a criminal, like I had done it on purpose…

    The entire time I offered to do whatever I had to do….file a police report….claim fraud…whatever…and they basically refused to help.

    PayPal doesn’t care about anything except sucking in as much money as possible.

  9. CDFinder Says:

    Yes, the support of PayPal is a complete desaster, it is virtually impossible to get anything done if you have a real problem.

    While it works, PayPal is nice and cheap, but if it doesn’t work, you are royally screwed.

    We had the same shitty and brain-dead “additional security measures can be completed”, while we were in a vacation.

    It seems they hit you with this the second your account exceeds a certain limit.

    In my case, these dumb pricks wanted to see a “water bill” or anything, to make sure we really were who we claimed to be.

    This is by far the most idiotic thing that ever happened to my business hile in existence. And of course their helpless phone “support” is the worst nightmare on the whole planet. Good thing we also use Kagi and can switch quickly between the two.

    Thanks for mentioning FastSpring and Avangate, we will certainly also look at these.

  10. Lina Inverse Says:

    PayPal has “grown too big”? Well, yeah, but they’ve been doing this sort of thing for years. The slightest bit of due diligence on your part would have told you why their fees are the lowest and suggested to you that “you get what you pay for”.

  11. Dennis Says:

    This happens to non-business customers as well. I remember they all but asked for a picture of me in a zebra-suit doing shots in Zimbabwe. It was very frustrating and took days of negotiation which ended in a no– because I mistyped a digit of my phone number in the account creation. Simply ridiculous.

  12. Derek Martin Says:

    I used to work for a large online dating site as a programmer. We had a high number of chargebacks (people who call their credit card company to get a refund, saying they never ordered the membership) because the wife would find the account and the husband would deny that he bought it.

    For this reason, from time to time, our payment processor would decide we were having too many chargebacks, and stop processing our transactions. When that happened, we had a full-time employee whose only job was to call them and sweet-talk them into processing our transactions again.

    How did we handle this?

    We had payment processing agreements with 5 or 6 different companies, and every transaction used the a different one. The first transaction of the day would use processor #1, the second #2, the 6th used #6, and the 7th used #1 again. Any time a payment processor stopped accepting our transactions, we removed them from the list of available processors.

    This technique was much more difficult than using a single payment processor, but it guaranteed that the money kept flowing 24/7.

  13. Esteban Says:

    Wow. Uber scary story.

    Thanks for the warning. I was planning on using PayPal for a future project; this is a clear red light on that.

    Thank you again!!! I couldn’t believe it. Wish you success with the new service.

  14. Jpc Says:

    Thank you for sharing your story. I was currently working on setting up a paypal account for my site but after reading this, I am going to explore other options. Other people have metioned (FastSpring,Avangate) I am going to look at those. Thanks again and good luck

  15. Phil Says:

    Sorry, but if you are running a business, you need to use something else other than PayPal – for one it marks you as an amateur.

    You’ll actually find that the fees involved with getting a merchant account and using a “real” payment provider are often less than PayPal (at least in the UK). One of our clients calculated that by switching from PayPal to SagePay he saved in the region of £30,000 in a single 12 month period.

  16. Eric Says:

    I had some dealings with a limited account in the past. I was able to get them to release my money after contacting the district attorney in Santa Clara, CA (Paypal HQ) and the CA Department of Financial Institutions. I also sent letters to the BBB and the President of Paypal.

    I ended up getting my account reinstated, my money released, and 4 apologies for the “misunderstanding”.

    I don’t trust them with my money anymore.

    If you want more details send me an email, I will share what I can.

    Good Luck!

  17. Rob Says:

    I had a very similar experience with PayPal, and I will never use them again for any kind of online e-commerce. They totally screwed me over and there was basically nothing I could do about it.

    I cannot urge people enough to NEVER USE PAYPAL FOR YOUR ONLINE BUSINESS. It does not matter whether you have done anything remotely wrong or not; you have no kind of recourse and you will eventually get screwed.

  18. Jeffrey Stevison: Programmer and Network Administrator » A Small Business Owners PayPal Nightmare Says:

    […] is an article from a Mac software business owner over at apparentsoft.com describing how PayPal cost this […]

  19. Yossi Says:

    I had a similar experience and I strongly advice to stop using Paypal, read their terms of service first and notice how they can pretty much do with your money what they want.

  20. Xiao Z. Jia Says:

    By now everyone should know Paypal is a nightmare to deal with.

    The problem is that they don’t have enough people to handle cases one-by-one, and they decided that to max profit they’re not going to do so.

    So what to do?

    Simple, automate everything, even the disputes. Account activity seems “suspicious”? Hold funds, freeze account. As long as Paypal gets the longer end of the stick they don’t really care what happens.

    Ebay transaction is a small exception, they pay a bit more attention to those, but still heavily automated, that’s why those “ship an empty box with rocks” scam works. As long as you have a tracking number Paypal’s “investigation” stops there and things are decided in you favour.

    When you file a dispute, you’re not dealing with anybody, just a set of algorithms, so it is really a sham. And it is extremely hard to reach a living person, and more often than not they’re swamped with request with no authority to act on anything.

    If you use Paypal other than small transaction for Ebay then you’re doing it wrong.

  21. Lawrence Krubner Says:

    I had exactly the same experience with PayPal in early 2002 – I had a big spike in sales, which they thought was suspicious, so they limited my account. I called them and they asked for documents. I faxed them documents and then they asked for more documents. I had about $2,000 sitting in my PayPal account, some of which I’d been planning to use to pay my rent that month. Every time I satisfied one of their requests, they’d make another request for more data. 6 weeks went by.

    In the end, they restored my account, but for 6 weeks they threw my life into chaos. At that time I was receiving most of my money via PayPal, so it was as if I’d suddenly been fired from my job or something, not being able to receive any money from PayPal. Their customer support was the least helpful customer support I’ve ever dealt with.

  22. John Says:

    As one of my co-workers would tell you, this is the point at which you file a complaint with the state Attorney General’s office. You’d be amazed at how much response you can get out of a company, even one like PayPal, when the Attorney General’s office contacts them about suspected fraud on their part.

  23. Jeff Says:

    I would submit any and all PayPal complaints to the Federal Trade Commission.

  24. Patrick Says:

    I had always heard rumers regarding the horrors of Pay Pal but I figured all of that was in the past and it had gotten better. Well a friend of mine and I went into business helping people sell their vehicle online. We would go out take pictures / video and post them on the net. Well we used pay pal as our payment processor. Everything worked well at first but then we decided to change our prices. When I logged into pay pal to make the changes everything appeared fine but then when I went to test the website all my services threw back error messages. I call pay pal and fight with two different support reps and finally one of them told me I had to delete all of my service related products and redo them from scratch. I couldn’t believe how stupid that sounded. What if I had hundreds of products instead of a hand full. How does that company even make money.

    I will never go back to pay pal after that experience. I checked out FastSpring and I like what I am seeing. I might try them out and see how things go. Has anyone had experience with them long term?

  25. inder Says:

    Consider using Google Checkout.

  26. admin Says:

    Google Checkout is not an option for me, since I’m not in US. Plus, I’ve heard they require the buyer to have an account with Google Checkout, which is a big no-no. In addition, I think I never saw a software vendor using it, surely not as sole processor. At least not within Mac indies, like we are.

  27. AllenB Says:

    Would you reconsider Kagi? I looked at their site after reading this. Not too bad. I bought some cad software through them some years ago. Smooth.

  28. Closer To The Ideal » Blog Archive » PayPal can be abusive Says:

    […] Apparent Software has suffered an encounter with the abusive anti-fraud squad at PayPal. I’ve personally had an experience that exactly matches their story. This is what happened to them: I log into my PayPal account and what do I see? “For my protection” they have limited the ability of my account to withdraw or send money but most severely, they also disallowed the account to receive payments! […]

  29. matt Says:

    Used PP to sell print pass concert tix. Saw they put a hold on MY MONEY pending “positive feedback” left by the buyer.. Will now never use ebay or paypal ever again.

  30. Josh Says:

    Quote: They have grown too big to be efficient and caring for their customers.

    Practices like this have been a part of their business model from the very beginning.

    When the service first started, people thought PayPal was going to fold because (on paper) it didn’t look like a sustainable business model. And it wasn’t, if you don’t include stealing from your customers.

    Once horror stories just like this one became well known, it was easy to see where the revenue was coming from. Paypal’s popularity began to dip.

    Then they joined ebay. Ebay had a good reputation, and I for one thought that PayPal must have cleaned up their act for the merger. I still wouldn’t let them anywhere NEAR the bank account with my rent-money in it, but I used it for small things. And the internet as a whole seemed to have turned its look of disapproval away from paypal.

    Within the last few years, internet neophytes have asked me if PayPal is safe. I would tell them about the horror stories of the past, but vaguely indicate that that was a long time ago, and that since merging w/ebay they seem to have found ways to MAKE money instead of stealing it.

    Then this comes along. Right down to the formula of interactions used to stall/frustrate/disaffect people from fighting back. It’s the EXACT same game I used to read about on gripe sites all those years ago. I realized that nothing has changed, and that (to my suprise) paypalsucks.com is still a vibrant community. Even if they ARE still using the same site design they had ten years ago.

  31. vin Says:

    you should have a lawyer contact them.

  32. paypalsucks Says:

    Just a quick note. As you can see in this video, paypal sucks for consumers too!

  33. Ian Drake Says:

    I’ve been meaning to switch to Amazon payments. This story just lit a fire under my ass.

  34. Geode Says:

    It seems to me that since you got a large amount of money frozen in your account they are using it as a free loan to make some money off of themselves most likely invested for interest whether through another banking institution or through loans to other consumers- telling you it will take six months so they can collect interest on it for that length of time – I would recommend a class action lawsuit against paypal, asking not only for immediate release of your money but that they also pay interest for the total amount of time from when they froze your account till you receive your money back, as well as additional funds to cover lost business caused by their actions. It may take longer than the six months to get your money and interest, but the only way they will change their business practices is if enough people get sick of getting jerked around and show that they will let their money sit through court and ensure it costs paypal more to do this than they make in “stolen” interest

  35. Alan Says:

    Thanks for sharing! I’ve been looking for a payments processor, and you can bet I’ll be staying away from Paypal. Amazon payments looks interesting, though.

  36. Paypal victim Says:

    Same thing happened to our business: we were using their “Virtual Terminal” service and they limited our account — and despite repeated back-and-forths with them, providing all sorts of proof of who we are, who our company was (we’re an incorporated business, no less!), our sales material (they demanded physical copies of sales brochures?!), they still refused to process our payments.

    The crazy part is we had one of our partners apply with basically the same info and we’ve been up and running with hundreds of happy customers for a year and a half.

    What I’ve learned is that you MUST have (multiple) backup payment processors if this is how you’re going to take payments. We currently have 4 processors with whom we round-robin orders. It’s a real PITA to set this up, but having PP (or any processor) hold your funds can absolutely wreck your business…so you have no real choice but to do it this way.

  37. Z99 Says:

    “PayPal decided that it doesn’t want to do any more business with you”

    This has been a constant mantra of PayPal since being purchased by Ebay many years ago. I have have my personal and business accounts cancelled, friends who ran online businesses were also shoved out into the gutter with their only income frozen in paypals accounts for months at a time.

    F**k paypal, someone please develop a new micropayment site (no not egold!) so that we can kill this giant.

  38. Dan from FastSpring E-Commerce Says:


    I’m sorry to hear about the problems at PayPal. I think you’ll be very pleased with the new experience with FastSpring. You certainly will not need to worry about us restricting access to your funds (with the rare exception of cases of obvious fraud or illegal activity). As you may have experienced by now, we respond to all emails from you or your customers within 12 hours or less, including on most weekends and often during off-hours, though in reality we often respond in just an hour or two, and our support staff is packed with software industry vets who know the business cold.

    If you ever have any issues, you are always welcome to contact me directly, but in my experience, I just about never hear from a client with an issue because our support-obsessed support team has things so well covered.


    Dan C. Engel, CEO FastSpring Email: dan at fastspring.com

    FastSpring offers a next-generation global payment processing, merchandising, & fulfillment solution for software publishers & other online merchants which is focused on customer service, flexibility, & reasonable pricing. View the Product Demo at: http://www.fastspring.com/

  39. Diederik Hoogenboom Says:

    We have had a similar (but no where near as bad) experience when some European legislation changed and the PayPal account was limited until we filled-in and returned all the forms. This whole process took a few weeks to complete. Needless to say we are not using PayPal anymore.

  40. Andy Says:

    The problem with Paypal is that it oversteps it’s bounds on what it’s role in the purchasing process should be.

    Let’s say you were selling the bundle w/o the permission of the other developers (seems to be paypal’s main concern), why on earth is it their role to play copyright police or even verify your selling arrangements at all? I was under the impression we had courts to determine grievances in these situations, no?

    For all that is great about the internet, the one thing I really hate is how just by using it as a medium of exchange (be it money, downloads, or otherwise) companies and governments feel like they have the right and responsibility (omg think of the children) to monitor and meddle in the process.

    You can trade cash for anything in the real world, without any sort of ridiculous verification process, but online we have to make it painful.

  41. Kosta Rozen Says:

    Andy, we completely agree! This is exactly what I was telling Jacob in the middle of that crisis… I guess one of the reasons to that is because in general, people seem more wary and suspicious on web-based transactions, so the intermediaries think they should be holier than the pope and take the policing into their own hands to make the people feel secure. Take my dad, for example – he will give his credit card to any classier in a dime store without shadow of a doubt, but he still fears to buy online for fear that his credit card details might be stolen. And no amount of my stories about the benefits of 128-bit encryption help a bit :-)

  42. PayPal Bad emmm k Says:

    Don’t use PayPal. Get a real merchant account. I hate to hear stories like this but I hear them to often.

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  44. David Keller Says:

    WOW! Thank you for sharing this story. I have had some issues (smaller) with PayPal in the past, but I don’t think I’ve ever had more than $300 in transactions with them. I was considering using them for my e-commerce store, but I will not do that now.

  45. KafeKafe » Perils Of Using PayPal Says:

    […] Apparent Software blog » Blog Archive » “Is PayPal good for your microISV business?” A short P…. Share and Enjoy: […]

  46. Alan Hogan Says:

    For a completely legitimate, country-registered fundraising raffle website I was in charge of, both PayPal and Google Checkout revoked our accounts without warning and without hope of appeal, for being “gambling websites.” (Google didn’t even spell it out; they only said we were in violation of their rules, never specifying the actual regulation in question.)

    The only thing any e-commerce business should do is work directly with legitimate payment gateways, like Chase, QuickBooks’ merchant services, or Authorize.net, for example.

    Avoid PayPal. Avoid Google Checkout.

    Brutal, insensitive, thieving bastards!

  47. Alan Hogan Says:

    sorry, “county-registered”

  48. Jaredh Says:

    A relative of mine had a very similar situation with his online business. Paypal locked his account so he was unable to pay his vendors. He got some lawyers involved, which didn’t really help clear it up in a timely way.


  49. Robert Senn Says:

    I’ve had a similar thing happen to me, I received some money from a sale on ebay and when it went into my account they wanted a verified home address, I gave them my PO Box since we don’t have mail service in my town. They denied it and after fighting for a month reinstituted my account. I at one point in time wanted to setup a bill pay through them for my utilities to tray to ‘autopilot’ my bill payments, and was unable to do so because of verification limitations. I’ve never fully trused them as they are NOT FDIC registered and not actually bound by any normal banking laws. This story has opened my eyes thhat last little bit to make me clsoe my account and no longer deal with people who use PayPal.

  50. exchange3d Says:

    I similar nightmare stories with PayPal twice in 5 years that I used them as payment service. Both times the entire business was practically down for a whole day. What’s even worse is that I did not chose to use PayPal in the first place, because I knew how bad they are. I was using Verisign and was happy with it until it got acquired by PayPal.

  51. Mark Says:

    Had an account with them (odd bit of business) for years with little activity, but read the t&c upfront and saw that it could easily get ugly so didn’t go that way. There should be some regulation and means of forcing their participation and a remedy outcome, but as we see, that is a tough nut to crack, even with the mainstream banks, so, in the wild-west that is the internet, good luck.

  52. Richard Says:

    OMFG.. This is the scariest thing i have ever read.. My online computer selling business recently started using paypal as one of its payment options, now i know they can be a right pain in the a.. when it has to do with eBay, but ‘a registered business account receiving money through us, we’ll put a stop to that’ You are right, they have gone from the convenient way for us to transfer funds (especially overseas) to a bank without the legal ramifications, lets see a local bank try to hold your money for 6 months because you started using the account and see what a happens, but paypal, there is no store, they are just a series of call centres, each person given 12% of the case information of the person calling. I am so horrified right now im re-concidering the higher bank fees to have an SSL website and just accept CC payments online.

  53. Nathan Duran Says:

    You CAN actually speak directly to the fraud investigators if you get the corporate office’s number and call it every ten minutes for several weeks. That was the only thing that got my account de-limited when they pulled this trick on me 10 years ago as their fax system is essentially a black hole which nobody in the company actually keeps tabs on.

  54. otakucode Says:

    Take a moment to consider how businesses like yours are a gigantic threat. The idea that someone out of a small office or out of their home can access the customer base on the Internet and make a great deal of money is a tremendously destabilizing force in our culture. In our culture, you get a job and you make money for a company and the very structure of the company eats up 99% of the value you create. When a person or group of people sell directly to users with little or no corporate structure, that is taking workers out of the pool and presenting a direct threat to the established order. What if this becomes a widespread trend? The entire structure of monumental amounts of people creating massive amount of value and that being collected by a very few at the top of management is directly threatened by this.

    There are certainly companies that can encourage this sort of activity, but there is one class that absolutely cannot. Publicly-traded companies. They are forbidden by their shareholders (when I say shareholders, I mean Goldman Sachs, they’re the only ones that own a large enough chunk of everything to make demands of large companies with the threat of dumping their stock and tanking the company) from enabling this kind of threatening behavior. Anything from paying employees above the market average to facilitating the transfer of large funds of money to individuals poses a threat to their shareholders and they will take great pains to, at the very least, not take an active part in enabling this.

    Stay away from publicly traded company if you are one of the rapidly growing “creative class” of people who make their money peer-to-peer directly from other individuals. They have their sites set on you and your kind.

  55. PayPal Reliability Problems « Vincent Gable’s Blog Says:

    […] 2009-12-17: A terrifying and Kafkaesq story of Paypal shutting down an indie developer’s account, because …. Comments […]

  56. ___ Says:

    Well, I guess I’m going to scratch PayPal off the list when I launch my app… sheesh!

  57. Sean Tierney Says:

    that’s really disturbing to hear. We have Paypal as an alternate checkout option for our software sales but that sucks they put you guys though the grinder. Have you tried setting up Google Checkout? We pulled that together fairly quickly and if you’re doing anything with AdWords they give you credits based on sales to use towards AdWords. Obviously securing a merchant account and gateway, etc takes a lot longer but Google Checkout can be put in place fairly quickly.

    anyways, the Internet forgets nothing and you can tell by all the comments here that at least your consolation in sharing this story is knowing that their mishandling of your situation will have a material negative impact on their business and reputation.


  58. Toy Needle Says:

    There’s a lot of complaining going on here but not nearly enough alternatives listed. Everyone who posts a complaint should also then say what they did instead of using PayPal, otherwise these comments look like trolls ridin’ a wave.

  59. NC Says:

    Similar bad experience myself. Stupidly had my checking account linked to Paypal (I know better now). Had an eBay transaction go through normally. Then had Paypal siphon out close to $1000 from my Checking. My balance covered it luckily. Paypal held this money for close to a week and half until they gave it back with ZERO explanation whatsoever.

    After this they wanted me to jump through a bunch of hoops to re-“verify” MYSELF with them… So basically after they completely destroyed any trust I had in them and they virtually stole 1k for over a week, returned it with NO explanation I was the one who owed them an explanation somehow…

  60. FakeName Says:

    I find it fascinating how your new payment processor’s CEO found this site in less than 12 hours but we still haven’t heard from Paypal. Tells you how much they care about their online reputation. After all, you just got fireballed.

  61. Gordon Says:

    Their business is the internet so why are they messing about with faxes. They should be checking out your website, your partners websites and sending emails and making phone calls to verify whatever it is they want to verify.

    I think also that it depends on how many transactions your business is doing. It sounds like you were doing too many for them not to take some kind of action but not enough for them to waste their time doing a proper job. They want a high volume of customers each transacting small amounts as well as a few customers that make a huge number of transactions. They don’t want the guys in the middle just trying to make a living. A high street bank in the UK admitted something similar a few years ago when it stopped dealing with small traders stating that they weren’t setup to handle “cash”.

  62. Dave Says:

    Just curious – if you had used a business level account would any of this happened? I’m not being critical, but, it sounds like you had a personal PayPal account you decided to chance for integration with a business. I’m not familiar with their policies in detail, but, I’m gathering that somewhere in the fine print they have all kinds of stipulations and warnings about how your account can be handled or even accepted if you operate outside the intended scope of your service level. This isn’t to say you hadn’t been using it successfully before or that save for the spike, you couldn’t have kept using it forever.

    I’m just saying that using a penny in a fusebox only ever worked safely for about 95 percent of the people that tried it. The rest…well, you know. The part of this story that involves all those calls and faxes is just the train wreck in progress that really started way back when with the decision to wing it.

    At least that’s how it sounds, feel free to correct. And if I’m wrong about the fine print, I’ll accept that too.

  63. James Says:

    When eBay tried to mandate Paypal as their payment provider in Australia, the ACCC (competition regulator) examined the issue and received submissions describing Paypal’s behaviour which convinced the competition regulator to withdraw permission for the policy. You can read the stories here:


  64. William Says:

    Only a complete moron would use Paypal. Just google ‘PayPal Sucks’ and you can see thousands and thousands of horror stories.

    PayPal’s business plan is: Randomly restrict accounts and make it very difficult to prove you are not a crook and a percentage of those people will walk away from their accounts and PayPal gets to keep the money.

    Since PayPal is not regulated as a bank they get to keep the money in non-active (aka closed) accounts – where banks would have to publish lists of account holders and try to located account holders and finally the state would get the money.

    This is just another US White Collar Legal Criminal enterprise. And don’t be surprised it exists – look at all of the shit we have had in the last 10 years – subprime scams, bank bailouts, $30 credit card late fees, credit scores, blah, blah.

  65. burito Says:

    Uhh… yeah. You got what you deserved. The tiniest bit of research would’ve found countless similar stories. This is nothing new. Same goes for Google Checkout, although they are slightly better.

    If you are serious about taking payments (online or not), speak to your bank. As a web developer who makes websites that do this sort of stuff, we spent a good week researching what was out there. And the results were simple… PayPal, etc were fine for one off or as a temporary stop gap measure, but if you are serious about selling stuff, speak to your bank. They will have serious security requirements, some will even require that they inspect the configuration of your server. You will unquestionably have to have a digital certificate from a reputable organisation (verisign or similar).

    This is a serious investment, but if you’re turning over enough to trigger PayPal’s laundering.. ahem “protection” algorithms then if it’s not PayPal who screws you it will be someone else. It means you have enough money to be a target of merit. Ally yourself with entities who have the clout to protect you.

    Lastly, if your bank doesn’t know exactly what to do about setting up an online payment gateway, that is appropriate for your sized business, you bank is crap, find a better one.

  66. Brian Armstrong Says:

    I actually had a very similar experience a while back as well!

    Seriously, Paypal needs to wake up and fix this. I can’t recommend Paypal to anyone either. Thanks for posting your story.

  67. V. Arora Says:

    I recently had a tussle with PayPal myself. I was on the other end though. I was the victim of some fraud and because of inconsistent information from these “specialists”, I lost my claim. I purchased an item from eBay and it was an obvious counterfeit. PayPal wanted me to ship this item back to perpetuate this fraud ring based out of Singapore (the shipping address was in the US but return was in Singapore).

    I called several times to no avail. Then, I used the email feature of PayPal and somehow the case was reopened (even though I was told that PayPal NEVER reopened cases).

    Eventually, the matter was overturned and I got my money back.

    I don’t know if that would work again, but it might be worth a try. It might take a long time but you might get some of your money back.

  68. Billy Y.. Says:

    I realize this is too late to help Jacob, but just for the record here’s a list of Paypal contacts:


    I use Paypal occasionally to buy things, but I don’t consider them anywhere near trustworthy enough to sell anything via them.

  69. Jeff G Says:

    I will never trust PayPal/Ebay to resolve any disputes/payment issues…EVER. They screwed me once. Never again.

  70. cak Says:

    This is a joke right? There have been stories like this for years, exactly the same problem. Paypal has been doing this for years. Go on, do a search, there are websites devoted to this stuff.

    But people like you will still keep using them. Ask yourself why? You are the problem, not paypal. Anyone with any brains has already left them.

    I bid your farewell, until the next genius makes exactly the same mistake, and decides to write a warning, that people like you will just go ahead and ignore.

  71. Kevin B Says:

    You are just the latest fool to trust PayPal with money.

  72. Jenny Says:

    I work for a big city law firm and I can tell you – Lawyers talk. Depending on how much money you have to throw (2k-6k) you could easily squash them, despite what they claim to the contrary. You would likely get all your lawyers fees back PLUS lost sales plus interest. Also they have insurance to cover claims like yours, they will likely just pay you a couple months into taking legal action to shut you up… I’m seeing a reasonable sized settlement here. Just take all your correspondence and Billy Y’s contact info into any civil litigation firm and kick Paypal’s collective asses. Hearing companies like this getting away with this shit makes my blood boil.

  73. Brent Says:

    Sadly, this is a scenario I know far too well. It played out exactly the same for us – except the documentation we sent in was approved within 72 hours of receipt (there were some problems uploading it into their system).

  74. Alan Smalley Says:

    We sold a new $200 wrist watch to a customer on eBay who had only a few feedbacks (no established track record). He filed a dispute with Paypal claiming that the watch he received wasn’t the one he ordered. He then shipped that watch back to us with a delivery signature required and provided that to Paypal as proof that he’d returned the watch.

    We received his shipment and were astounded to open the shipping box and discover an old rusty watch in a water damaged gift box that looked like it may have been sitting in his garage for the past five or six years. It was the same brand that he purchased but it wasn’t a model that we’d ever sold. Upon checking we learned that it was a model discontinued a year or two before we opened our account with that watch manufacturer. He kept our new watch and returned an old rusty one to us claiming a refund. He didn’t even bother to put the old watch in our new box. He just sent it to us in his old water damaged gift box.

    We provided Paypal with photos of the watch he returned, the water damaged box, and a complete explanation that we’d never sold that model, it had been discontinued before we started handling that brand, and his claim was a complete fraud.

    They ruled in his favor, withdrew the funds from our account, and refunded his entire payment including shipping. He had practically no track record with Paypal or Ebay whereas we had completed thousands of transactions with a near perfect record of customer satisfaction.

    That’s how it works with Paypal. Sellers are second class citizens. Buyers rule.

  75. andrew Says:

    I think you should seriously be considering legal action against Paypal

  76. Ben Says:

    I had a similar situation with my paypal account that has been a business account since probably 2002ish and it had been relatively inactive for the past year or so (I used it for a small shared webhosting business back then as well as my personal account) until this year when I made 2 or 3 purchases with it on newegg and amazon worth between 250 and 300$ each and they suddenly decided to limit my account and I currently have about 500$ frozen in there. I feel your pain man, I will never use paypal again.

  77. Tom Boucher Says:

    Has a lawyer been consulted? Or maybe even a governing body? this seems highly illegal and fraudulent…

  78. ex-employee Says:

    You should have switched to google payments it would have taken 5 minutes.

    That said I recently quit my job at paypal for ethical reasons. Paypal and ebay are the only tech companies I know of in the bay area that have been sent actual mail bombs.

    I’m sorry to say that your experience is normal. In fact it’s encouraged. Everyone’s account unless they are “whitelisted” is turned off like this, and the white list is very very short and even these people are monitored. It’s not because of fraud either, the truth is…

    It’s an excellent payday. You put money into the account (a large sum quickly) and we exercise some clause in the user agreement allowing us to freeze, and hold the money to prevent fraud (in the name of protecting the customers!) but really what we are doing is seizing your funds. When I quit about 60% of the funds held in this manner are never returned to the customer.

    Paypal will never admit it but this is the largest percentage of there income. They operate like a bank, but aren’t required to following any banking regulation. No–one should use paypal for ANY REASON ever.

    Even making purchase should never be done through paypal. Buyer protection is a scam. If your paying with a credit card, YOU ALREADY have visa/mastercard 100% protection, and unlike paypal, they’ll give you all your money back on ANYTHING for any reason, in 5 minutes. Paypal will investigate, and only returns money in about 30% of the cases (They are trying to get the numbers even lower)

    Paypal operates as a bank, without being subject to ANY banking regulations. At the all-hands meetings they would brag about this and make comments about the “bogus” lawsuits in new york (?) or some other state they they were going to beat.

    Never ever use paypal. I can tell you for a fact that almost every single employee who works there refuses to use the service, and if they do, won’t link it to there checking account.

    Realize paypal exists to make money. They aren’t there to help you. When you sign up you give them 100% access to your BANK, not your credit card, your actual ACH transaction, you should be terrified of this, there is ZERO protection for this, and it gives them access to your entire life. No corporation on earth should have access or the ability to remove money from your bank for any reason ever (Same thing with bill pay, don’t do it, you give creditors your money)

    Don’t bother to sue paypal, it would be easier to sue Wells Fargo and win. Trust me, it’s like suing the mob.

    It may be insensitive , but I’m shocked by how many people give out personal information for to pay bills, or other reasons. NEVER GIVE ANYONE YOUR CHECKING ACCOUNT INFORMATION. Your more likely to be taken advantage of from a corporation than ever have identity theft happen. When you pay bills, use a credit card. Better yet use 1 time disposable credit card numbers for every payment. Sure it will take you 20 minutes every month to pay bills but you will never ever see -$8,212 from Paypal 6 years after your account was closed. (We did this to a customer)

    I literally quit because I couldn’t take it anymore, it’s like an insurance scam, we aren’t allowed to pay anyone, and we are supposed to steal their money any chance you get.

    I still know one or two people there who can’t afford to quit there job right now, i you post the paypal email addresses, I will pass them along and have them “unlock” your accounts on a friday when the executives aren’t busy eating children.

    If anyone reading this has paypal, cancel your account, call your bank and chance your account number. You won’t be sorry.

    Hope that helps. Please don’t post my info.

  79. Rob Says:

    Thanks for the post. About to launch a digital music service in the New Year and was looking for something to explain to musician’s why we would not be using PayPal: this post covers it pretty well!

    All the best

  80. Taimoor Says:

    My PayPal is also on a limited access and despite giving them all the required documents and proofs, it has been closed down. Is there anyone who has got back their money after 180 days? What is the procedure for that?

  81. Ian Drake Says:

    BTW, @ex-employee that’s why I have a seperate checking account just for linking to Paypal. Money comes out of paypal, into the staging acount, and then get’s transfered out of that account.

    Still, I’ll be moving away from PayPal soon enough.

  82. Chris Says:

    What a freaking nightmare!

    I’ll be looking to move away from Paypal ASAP.

  83. links for 2009-12-17 | The ‘K’ is not silent Says:

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  84. Paul Wilson Says:

    While i understand your issues with pay pal, I looked at your site.. and you do not really have clear information about sales, returns, and where you are located. All of this is needed for a vendor like Pay Pal to feel warm and fuzzy about who, what and how you do business. You need to put clear terms and conditions of sales on your shopping cart and be PCI compliant it you expect to directly process credit cards.

  85. Holland Says:

    I had the same thing happen with PayPal, almost exactly as you describe, except one thing. They pulled back as much money as they could that I had flushed out to my bank account (I had the daily sweep enabled.) Basically they stole out of my bank account.

    Luckily, it did not take 6-months to get my money. After weeks of calling, they gave me my funds and fully closed my account.

  86. Agarwal Says:

    Talk to a lawyer. This seems to be a pretty obvious case of restraint of trade and interference with a private contract.

    We had a Fortune 500 company do this to us once in one of their a foreign subsidiaries – they settled out-of-court for nearly $30M and they had to lay off 200 employees as a result. Just for screwing with a contract we made with a rep firm to sell our products for us – their local subsidiary threatened to ruin them if they didn’t break the already signed contract with us.

  87. jardenberg kommenterar – 2009-12-18 — jardenberg unedited Says:

    […] Apparent Software blog » Blog Archive » “Is PayPal good for your microISV business?” A short P… […]

  88. Laura Kinoshita Says:

    Dude, I don’t get why you don’t just sue PayPal for all the losses you’ve incurred? After you get your money, of course!

  89. Carl Says:

    Have you considered to file a report with the police? I’m not a lawyer, but I hardly doubt there’s a legal rectification for PayPal to just keep your money for 180 days because they just want so. Especially since you’ve already presented them documents showing that their behavior is both uncalled for and lacks any factual basis.

    They may be able to ignore you, but they can’t ignore police.

    Best of luck to you!

  90. Morgan Adams Says:

    Thanks for this warning!

    I’ve recommended PayPal to some of my small e-commerce clients and colleagues in the past. I don’t think I will do so anymore, and I myself will use PayPal as little as possible.

    How unbelievably frustrating for you. Terrible business practice. (Maybe worth a report to the Better Business Bureau?)

  91. Duke Says:

    I stopped using PayPal, after my account was restricted on Ebay, my unusual activity was that I bought two items for £1 each. I had bought items for larger sums before, I felt it was all petty and intrusive, they ask for all the same details photo ID ect, I declined and do not use them anymore.

  92. JM Says:

    Thanks for this post… !

    Thought I was all alone – in a different turn of events I SOLD a motorcycle, shipped it, received payment and AFTER the buyer received it, claimed it didn’t arrive. I jumped through the hoops, much like you did – call after call, faxes, proof of delivery, etc.. Paypal basically said that they could not verify, even with the shipping manifest doc from UPS that it DID IN FACT arrive at the buyers business! They refunded the clients money – which was already being ‘held’ and I lost both the motorcycle and the cash.! As you could imagine, I tried everything.. nothing worked, I called, refaxed docs, called the sheriff local to the buyer, etc. etc.

    Now, years down the road, our software dev team is completing an eCommerce application.. and we are seriously considering NOT including Paypal as a gateway, as well as warning users of the potential lack of care for their business Paypal might exhibit.

    I’ll be sure to link to your blog once we go live (Jan 2010) and spread the word. 😉

    Thanks and best of luck with your business. Cheers

    JM Team Lead Nano-Cart

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  94. Clive Says:

    Feeling sorry for you guys. Seriously, if everything was well documented take them to court.

    > I asked the “specialist” if there was any way I could have prevented

    > The answer was a definitive NO. You get it?

    I really feel for closing my Paypal account and for sure won’t ever use it for business.

  95. Donald Says:

    A few months ago a bunch of iTunes transactions suddenly started showing up on my PayPal account. My iTunes uses a different password than PayPal, and I’d never linked the two or paid for anything on iTunes (or, indeed, from Apple) via PayPal. Because my PayPal account was linked to my bank account, they were direct debited immediately. It wasn’t a huge sum, only about $20, but that was MY $20.

    So I immediately filed a transaction dispute. Needless to say I ended up going through their slow-as-molasses dispute process, spending a bunch of time on the phone with them, et cetera.

    Can you give me any details about the iTunes transactions? Account? Date? No.

    Can you prevent further iTunes transactions? Well, you have to de-link your account, sir.

    But I never have had an iTunes account linked, and in the “linked accounts” section of my PayPal profile it says there are no accounts? OK, we’ll do that manually on our end.

    A few days later I got the response: “PayPal has determined that this was not an unauthorized transaction.” There’s no appeals button. By running around the website, I discovered that the only appeals process involves sending them paperwork via snail mail and would be far, far more work than $20 is worth. It’d be really nice to fight for the principle here, but it’s not practical.

    So, yeah, screw those guys.

  96. Verry Velly Says:

    I hate paypal!

  97. nik Says:

    Buyers are hurt by paypal, too. I regularly buy software on a corporate charge card. I usually have to break the transactions up into amounts of less than $300, and not all on the same day, so that paypal will not reject a “large transaction.” Once, I was blocked from purchasing a product completely! I called and got the “specialist,” who flat out told me that I can’t buy that product! Unfortunately the vendor exclusively used paypal to process their payments, so we moved on and the vendor lost the sale.

  98. Lane Roathe Says:

    While IFD does offer paypal as an option because it’s otherwise hard for overseas customers to pay, it has always been a worry that their policies are so draconian, and I know of one person who’s substantial frozen account balance was never unfrozen.

    This is a good reminder that I need to complete my setup at fastspring.

  99. Apparent Software’s Problems With PayPal « Says:

    […] Original source : http://blog.apparentsoft.com/business/124/is-paypa… […]

  100. Tom Matthews Says:

    I’ve just closed my PayPal account based on my own bad experiences, their final parting message was “Please contact us at 08707 307 191 to discuss and resolve any account concerns”. I didn’t want to waste my time or money on hold, goodbye PayPal.

  101. Amy Says:

    PayPal certainly has its problems, but trust me, the alternative is NOT Google. Do not trust Google Checkout. If you think this story is bad, consider the following:

    1. The author was able to speak to people.
    2. He will eventually get the money.

    If you have a similar problem with Google Checkout, your account will be closed automatically, there will be no one to talk to, and you will never, ever, ever be able to receive the money in the account. They keep it.

    Here’s my story:


  102. Andy Polaine Says:

    PayPal is indeed a nightmare for customers and sellers alike and have a totally dictatorial attitude. Someone (ideally someone big like Google, but I’m wary of the above commenter’s story) really needs to provide an alternative to their monopoly.

    Here’s my experience with “customer service”: http://www.polaine.com/2008/01/25/paypal-a-customer-service-nightmare/

  103. Norbert Says:

    Unbelievable. Looking at some of the posts here, the whole thing looks like it could be within the realms of organized crime. I’d sue for damages and document the whole thing blow for blow on the social media scene. Has paypal/ebay contacted you? There must be literally thousands of tweets, blog entries etc, and this only within a few hours of your post. Looks like a major PR f…up for paypal/ebay. I’d really like to know whether they’ll sit it out or take corrective action. We are presently in the process of launching another e-commerce project. Paypal is presently too risky to even consider as a payment processor. Btw. I also bought your software. Hopefully you got your money.

    Take care and best of Luck


  104. JJIrons Says:

    PayPal is the very worst company I have ever dealt with in the area of money exchange. I’m not one who gets upset at much of anything but PayPal managed to piss me off hugely. After deleting an old bank account from my personal account, it kept showing up if I ever tried to purchase via PayPal. After several attempts to delete a dormant bank account, it appeared as if it were finally deleted from my account. Well, I was finally ready to go, right? Wrong!! I purchased my product and in a few days I received an overdraft notice from the bank that I deleted from my account! I went back into PayPal and yes, the deleted Bank account was there again! To aggravate matters, the deleted bank account had been there as a back-up in case my primary account was short on funds (which it was not). Un flipping believable! After several attempts to rectify this situation with PayPal they basically told me “too bad.” NEVER will I EVER use them again. AND, I am very happy to tell all of you the same thing and if I were you, I would delete your account with them. Just stop using them because they are dishonest and they are thieves. They should be legally dissolved and some of them sent to prison.

  105. Chuck Says:

    If you are looking for low cost e-ccmmerce that completes with paypal, you should look at SWREG http://www.swreg.org

    You could get as low as $0.99 per order with no percent on the sales.

  106. Chris Says:

    That story is seriously scary and has changed my whole opinion of PayPal. Technically you could sue them, but in a typical David and Goliath manner they’ll just crush you with all their available resources until you can’t afford the lawyer any more. What big companies like PayPal are scared of however is bad press/media coverage. TV is the most powerful medium, but a big newspaper “investigation” will hurt them too – and they’ll do anything to make it go away and fix your problems immediately. Ever mentioned a company negatively on Twitter, and had their “marketing department” respond and offer to resolve the problem? That’s because you may have hundreds (or thousands) of followers who read this and it does their brand damage. This blog entry is a good start, but only has limited niche traffic. The media love stories like this (of the big companies screwing little businesses), and it really damages the brand. With millions of potential viewers/readers it will have PayPal running scared, and you’ll have your money back and an apology before it even airs. Then other people/businesses will pipe up about their own problems which will create another story, and PayPal may be forced to change its ways. Good luck with it.

  107. Mary Says:

    Oh boy. We accept donations to our Buddhist religious institution and at one point had an issue with PayPal in which they wrote to us accusing us of transferring funds into a personal account. In our case it didn’t take us much effort to prove this was false, but the fact this even happened at all is yet another example of automation for the sake of cost savings gone berserk. Your story has us really nervous now. PayPal had done all kinds of funny things with their Money Market scheme also that had us chasing our tails for a while. This post is super helpful Good luck with keeping this all working!

  108. Just a reminder: Paypal can totally screw you over. | mindlace Says:

    […] mentioned before, PayPal can really mess you over. Especially if you’re a small business, you should avoid them. This entry was posted on Friday, December 18th, 2009 at 18:24. You can follow any responses to […]

  109. Loren Pechtel Says:

    While I have never had a PayPal account I think I see what’s going on. There seems to be a common theme behind an awful lot of the complaints. It looks like if there is fraud involved they let the money control their decision–if they can get the money from one side and not the other they rule in favor of the guy they can’t collect from regardless of what’s right or wrong.

  110. karl Says:

    We had a similar experience a couple of years back. We started a sale of our software, they froze our accounts automatically late friday night, and didn’t have any support during the weekend, then on monday i had to jump through hoops to get it unblocked, which they did (not as bad and painful as your story), but still it was scary. After that we didn’t trust just have one channel of payment

  111. Albioner Says:

    Thank you for the warning. My early experiences with PayPal “customer service”, years ago, were similar, but I was starting to reconsider using them. Looks like nothing has changed at all. PayPal may seem convenient, but… seller beware.

    Perhaps if you realize that they are tied up in eBay, which in fact does have quite a few fraudulent transactions to sort out, you can have some sympathy for their policies. But this kind of treatment has no place in serious business practice. Stay away from them… far away.

  112. Bryan Says:

    ex-employee said it all.


  113. Bryan Says:

    ex-employee said it all.


    Of course, stupid eBay won’t allow that, but maybe people can surreptitiously ask customers to pay that way.

  114. Anantomie Says:

    I have been majorly screwed by PayPal as well.

    The first time was like the bloggers, my money was frozen due to suspect activity or something bizarrely worded like that. I was selling on Ebay (the other dictatorial monopoly) and had opened a store and lots of money was coming in and going out after a year of nearly zero sales. Also I had decided to switch my business banking from a corporate bank to a local credit union. Apparently the combo tripped some ut-oh bot at Paypal and then I wasn’t able to give or receive money. Trying to reach a human at either PayPal or Ebay is next to impossible and quite frankly they sound like the computer generated bots as well. Long story short I finally had access to my account monies again but it was after the holiday rush, so what did it matter.

    I wasn’t going to use them ever again but trying to find 3rd party solutions short of opening a credit card account wasn’t feasible at the time. So I used paypal still to sell off some gear that I had while I was continuing to close shop and move to a new location. A buyer ordered a camera, it was sent to their address with delivery confirmation and that was that. Or so I thought. Ironically, the day that the item was said to have been delivered the buyer emailed me wanting to know where their camera was. Long story short they were a relatively new buyer on ebay, only like 30 feedbacks but all with 100% but they basically told me that unless I refunded their money they would file a fraud complaint with both Ebay and PayPa (sister companies). If you are a small/slow seller on Ebay, even one negative can put you into their account suspension realm and so after trying to find out from a human at PayPal what MY recourse was, I ended up refunding the buyer their money and I was out both a camera and $$. Later when I went back to check out the buyer I saw an interesting phenomena which was that all their early “buys” were small ticket items, $10 and less. During the time when they purchased the camera from me, I noticed a high percentage of big ticket items, $50-$250 range. And lots of neutral rankings a couple negatives left for the sellers. My suspicion is that this was a grifter who opened an account, bought a few small items to look safe and then purchased a lot of medium range items and would claim they weren’t received and basically blackmail the sellers into getting it for free. I alerted by PayPal and Ebay to this and never got a response.

    Basically I’m done with both Ebay and PayPal. Their attitude ever since then CEO Meg Whitman took over was basically, we’re Ebay and PayPay and we call the shots, you don’t like it, shove off. Well, I shoved off and ain’t EVER going back.

  115. Albioner Says:

    Just to second Eric’s suggestion to contact the District Attorney and agencies for help. PayPal’s ‘negligence’ in so many of these cases is bordering on criminal behaviour. You don’t have to carry the weight of fighting them yourself. I’ve found the CA Attorney General also to be quite responsive to complaints like this. More people need to be raising the visibility of this problem.

  116. jrk Says:

    why did you switch away from kagi in the first place? something we should know?

  117. meh Says:

    http://paypalsucks.com for many more horror stories.

  118. Graeme Says:

    I had the same experience with Paypal this week… My account was “restricted” just because I used it for the 2nd time in about 2month. I have had the account for many wears and not used it. I spent 40mins over 3 long distance calls trying to get the issue resolved. All they could say was that it was a problem with their security software and they were unable to override it.

    Well, I managed to override it, I took my business elsewhere.

  119. DaGuru Says:

    This is not the first time I have come across these kinds of stories. For anyone seriously considering selling over the internet I have a very reputable company for you to check out.

    Email me at mr.danny.g@gmail.com and we can discuss.

  120. admin Says:

    It’s just that PayPal fees were lower and interface could be done more integrated. Kagi’s shop backend is also quite cumbersom, although lately they are moving in the right direction.

  121. sfmitch Says:

    Paypal is the absolute WORST company that I have ever dealt with.

    Sure, there are plenty of companies that are annoying to work with but once you get a human being on the line and with some patience, things can get resolved. Not so with Paypal. They are a brick wall.

    Sure, there are lots of people who haven’t had any trouble with Paypal. But, the true measure of a company is how they respond when things go wrong and it is here that Paypal is horrible.

    I only use Paypal when I absolutely have to. I would never run my business on Paypal to save a few bucks.

  122. Tinu Cleatus Says:

    Recently, I had a bitter experience with Paypal too which I have put up on my blog here. http://blog.tinucleatus.com/?p=315

  123. Bojan Says:

    There are plenty e-commerce solutions oriented specially to software developers and they won’t screw you!

    RegNow (owned by Digital River) Plimus BMTMicro Kagi eSellerate (Digital River) ShareIt (Digital River) RegSoft (Digital River) Reg.Net (Digital River) Emetrix (Digital River) etc.

    Most of them probably accept paypal as one of the payment method so you don’t have to worry that you will lose customers who want to pay with paypal.

  124. Nil Says:

    I had also same kind of problem i had to refund 1350$ after more than one years can you imagine this, they told me fund was highly fraud, my question is to paypal if the fund is highly fraud then why after 1years?

    Don’t use paypal they will damage your business we are using different merchant account.

  125. Votre Says:

    Sure are a lot of complaints. Sounds like a golden opportunity for a class action lawsuit.

    Any enterprising attorneys out there reading this? (Hint Hint!)

  126. Oz Says:

    Why don’t you use micropayment services, such as daopay? Works fine for me!

    br, oz

  127. the blogger who did not sell meds Says:

    My account was closed last year with no recourse.

    I had a “Donate” button up on an old project’s blog, where I also sold links via Txt Lnk Ads, and checked for spam comments on an irregular schedule.

    One day some Paypal bot noticed the words “Vagra”, “Calis” etc AND a Donate button on the same page AND payments in excess of $500 from TLA. One employee added 1+1+1 and accused me of selling meds, because I was getting fairly big payments compared to prior activity.

    It did not help that I argued with them that it was spam comments from third parties, I even went through the hassle of explaining just what a blog was! It did not help that I told them TLA is a legit company and that thousands other Paypal users were getting payments from them too!

    Nothing helped. I could only withdraw my money, create another account, and hope that one day they would release the link between my bank account and the blocked Paypal account.

    So bloggers beware (or anyone with comments or wikis) : if you forget to remove spam, Paypal will fuck you over, accuse you of terrible things, and there’s nothing you can do.

  128. sunil Says:

    I’ve had major problems with paypal and an online business I ran too.

    My account was flagged for suspicious activity. We provided documents to prove that our activity was legit. The problem dragged on, and our documents were never examined by papal. We faxed them through several times, and were repeatedly asked for them. We swallowed the cost of making international phonecalls to paypal to sort the issue out. Even then we got messed around.

    Eventually we sorted the issue out. But it cost us time and money for international calls to them.

    Paypal suck.

  129. PayPal Support Club Click Here Says:

    P.S. A known fraud is for some one to phone you up claimingto be form PayPal. Like phishing emails they are after information to hack accounts.

  130. Jeff Says:

    I have had PayPal for a while now and use it to accept donations on my website. So far I have not had any problems. I do not have large amounts processed but as soon as they post, I transfer them to my account. One thing i might suggest if you continue to use PayPal and are worried about issues, use a prepaid credit card as your account, which is what i use. You can get one for around $10 and just use it for PayPal. Keep small amounts in the account.

    I have had some issues with another company (not a payment processing company) but a “very large” company, and i think part of the issue is the size of the company as well, bad practices aside. How can they take care of individuals when there are so many? I have been in customer service before and they want you to get calls handled quickly and move on to the next one. You are judged not by how well you help but by the call time. Growing too large is bad for business when you start forgetting the individuals.

    I personally have had several small businesses and can you imagine if i would have my small number of clients talk to a customer service rep who does not know or care about the client’s issues. The motivation for the rep is to get the check on payday not whether or not your customers are taken care of. When you are a small business you want to make money but you have to take care of your clients/customers to keep making money.

  131. Joao Says:

    This is nothing new, and it is scary… I had a similar problem with PayPal, and from then on, I NEVER use them, and call them PayPal.CON. What is needed here, is a class action lawsuit against PayPal by everyone who has ever been bullied by them. This is very real, people are being hurt, and their callousness and total disregard for customers is appalling! There are other websites about PayPal horror stories… this is just one: http://www.aboutpaypal.org/ I no longer use PayPal, nor do I buy anything from anyone who uses PayPal… When someone does, like pp.CON, shut off communication with clients, and unilaterally decides one is a crook, or is engaging in something illegal without even bothering to check things put, something is wrong… but what is really baffling is how pp.CON can go on operating and doing this without their actions triggering an antitrust investigation or something! That’s what I believe only a class action lawsuit would work, but it would have to be taken in hand probono and no one probably would go for that David x Goliath battle just for the sake of exposing this company. Kind regards, and good luck.

  132. Sjefke Says:

    Well, you made it here: http://www.sitepoint.com/blogs/2009/12/22/web-service-horror-stories/ – I advise Sitepoint not to use PP ever again :-)

  133. esjabe Says:


    Thanks for this. My small ecommerce site already developed with PayPal Payments Pro will now bite the bullet and convert to another gateway. According to your posting, a little pain now will save a lot of pain later. I am now on the FastSpring site as I type…


  134. schwedenstein Says:

    Though! 10 years after the horror began, every scammed one better shut up of Paypal stories (although amusing going on strongly). Paypal/ebay ( dont find another similar analogy)is by my opinion the only global player, who’s taking user’s money for a lousy countervalue, operating with consignor’s money as would be their’s own and let em stand in the rain at last. Get around them like the devil the holy water—

  135. Annie Says:

    It has already been years when the same thing happened to me and many other friends that we have already stopped using Paypal in anyway to buy or receive money since then. To us, paypal is nothing but a scammy payment gateway. There are a lot of bad paypal experiences written almost everywhere in the net and I don’t understand why till these days, anybody still can trust and use Paypal.

  136. Jake Says:

    The only reason they responded to you is that you could make a lot of noise, there must be many who could not do anything while paypal fed itself fat on the interest which seems to be a key part of their revenues. Just lock a few 1000 accounts for 6 months with @$500 and there is 5 million right there for interest/equity etc. Hand it to their trader and make it into 7-8 million. Of course the scale will be much bigger than this.

  137. Kyla Vanriper Says:

    Hey. I couldn’t get through to this page the other day. Anyone else had the problem?

  138. Parker Says:

    Funny, I’ve had problems as a buyer. My last transaction through them left me out $ because of a seller that turned fraudulent (built a reputation, then ran off with the money). Their exact answer to my phone calls was ‘if we get enough complaints about the seller we will look at the account and decide if you are eligible for a refund’. Based on the seller’s last site feedback it appears tons of people reported him, yet Paypal told me it didn’t hit a significant enough threshold for them to investigate and they couldn’t tell me exactly what would prompt them to get off their asses, just ‘maybe, we’ll let you know if we do’. So essentially, Paypal= unsecure and shitty service for both sides.

  139. Les Says:

    Never used PayPal as this is just what I would expect from such a service; it’s a service I would never advice anyone to use either.

    In the end, for a business you really do need to go that extra mile and get yourself a merchant account and a decent payment gateway processor. Sure it costs more, but you are a business after all.

    Google are pretty much the same in regards to their quality of service towards their customers, so it’s a complete -beep- mess for small businesses who have little capital at the start of their journey who depend upon these services.

    My advice is to spend a bit more time and money and get a better deal through either your bank or a reputable payment gateway processor and do read their small print – ask lots of questions until you’re satisfied even if it means a delay.

  140. Robyn Says:

    I am going through a similar problem right now with PayPal. I am shocked at their poor customer service, and I will never recommend them to anyone.

  141. Etienne Says:

    In September I sold a very valuable collectible bicycle on ebay. After receiving payment, paypal immediately froze the funds. (4 figure value)

    They wanted to see positive feedback from the buyer or the funds could be held for 90 days, etc. etc.

    I called paypal and spoke to a couple of people in “customer support” (a misnomer if ever there was one). They lied and mentioned a couple of steps that I could take, after which the funds would be quickly released (for example sending them fed ex tracking numbers, which we did and the funds were not released). I even asked for the name of the support person and asked them to send me a digital document (closest thing we could must to “in writing”) affirming that if I provided the fed ex shipping info they’d release the funds. Instead she e-mailed me a generic form letter about the issue that did not mention the steps she suggested in the least, nor her pledge to free my funds when those conditions were met.

    Eventually… I got my money. I was lucky that the buyer was honest and courteous enough to provide positive feed back.

    Basically… Paypal chooses to unilaterally act as a one sided escrow agent. In my case, they safeguarded the buyers interests very well… but my own interests were disregarded completely. The buyer, if he had been an unscrupulous person, could have claimed that he received a totally different bike, or that it was otherwise not as described. At that point… I would have been out of the authentic valuable bike, and the funds I’d received in payment that Paypal interceded to hold hostage until the deal was completed to Paypal’s satisfaction.

    There really needs to be a better alternative. The Paypal / Ebay nexus is grotesque in its excesses.

  142. Anonymous Says:

    Once again Paypal has shown that its turned into a huge evil corporate giant and everyone should be aware with this. I’ve lost thousands of $$ in same issue with Paypal, and I wasn’t even lucky enough to get my account back. I feel sorry for you though..

  143. Please keep this going! Says:

    PLEASE keep this thread going. It has now been reported to CNN, Michael Moore and a number of other eyes on Pay Pal. The people blogging here are being taken seriously as they are business people and not just low life eBay sellers (how Pay Pig views their partners!).

  144. Henrietta Says:

    Articles with links to complain effectively about PayPal, ie. FTC, State Attorney General lists etc. http://preview.tinyurl.com/njoo5f

    More links (different ones) in this article about eBay but they may also be used to complain about PayPal: http://preview.tinyurl.com/yfzvs9z

  145. NYM Arts Says:

    I stopped using PayPal and Closed my Account after PayPal caused physical damage to me (Loss of Appetite, insomnia, heart palpataions, paranoya, Sharp Headaches, High Blood Pressure and probably more). These things were caused by people INSIDE PAYPAL constantly sending me PHISHING Emails to try to rip me off. Armies of Ebay “Trolls” would inundate my Email box with so much garbage, I KNEW the only way to stop it was to completely close everything down, including my business on Ebay. It seems, when I continued to accept Money Orders and Checks, as provided in the SHERMAN ACT, Ebay set its trolls loose on me to drive me away. That Entire episode cost me almost 2 THOUSAND DOLLARS in lost money that I spent on raw materials for my invention, to sell in the coming Christmas season (2008). Now, I use Google Checkout “Buy It Now” buttons :o) It’s a Pleasant walk in the park. Thanks Google ! The Government MUST Prosecute PayPal. There are TONS of charges to be brought.

  146. shimon Says:

    i had also bad experience with pay pal, my old credit card has expired and they denied access to my account so i opened an other account and i use it rarely.

  147. Donate for Haiti Says:

    PayPal froze our account for receiving donations, they demanded about a dozen documents which we have sent and have had no answer back.

    Since then we have moved to http://tipit.to, so far so good.

  148. Drew Says:

    I sold a series of products on ebay. All were paid for, and almost all left positive feedback. Almost all, meaning, some haven’t left feedback yet. But feedback is 100%, with perfect sales ratio’s, because “all” my customers are happy. After the sales cycle finished, Paypal froze my account and ALL monies in the account. They demanded copies of my invoices and inventories. I provided what they asked for. – After this, they then started asking for contracts and agreements between my vendor and their wholesaler. This is not legal to ask, and they are requiring the impossible, knowing full well I cannot provide that legally. It is a trap, so they don’t have to release my funds of $2,453.89. They are threatening to hold onto my money for 180 days (6 months), by requiring me to commit criminal activities, to receive the moneys that is already mine, not theirs. I sent them an official letter asking them to release my monies, or I would pursue legal actions, including complaints. They responded by saying “Go Ahead”, we’re still going to hold “your” money for 180 days (6 months). They (paypal staff) are fully aware they asked me to commit crimes, but do not care, since I am not legally able to record “their” phone conversation asking me to do so.

    Update for today: Many of my customers have contacted paypal and said everything is genuine, no problems, nothing. Paypal has told most of them it is none of their business or lied and said my account isn’t even frozen…. But, today, I also got a final DENIED, we’re going to hold you funds for 180 days, but you can provide refunds if you like….

    Welcome to paypal….. don’t get sucked, because if you have a balance that is a large sum like that, they WILL get you….. Release date of my money: June 29, 2010….

  149. Chicago Attorney Says:

    I am surprised at how terrible the customer service is at paypal. I think it is because it is such a large operation that it is necessary to automate as many functions as possible. This limits the human interactions which could be sensitive to and react to customer service concerns.

  150. iam taking paypal to court Says:

    hi, sorry but im fed up to tell my story again and again. Next time i tell my story will be in court in front of a judge. I am going to meet a lawyer very soon and we will see what we are going to do. I spent £10000 (yes ten thousands) of commissions last year and then having my 2 accounts closed for Xmas ! Thanks very much Paypal ! What a present ! Now nearly 2 months without income. Cannot sell on Ebay too because cannot receive payments.

    Plus all phone calls and emails to Paypal !! I think i might be able to get £20 000 from them back plus lawyers fees !!

    Paypal are like Mafia !!

    BY the way they are still holding £10 000 of my money ! their answer ? just in case of reversals and chargebacks ? I am sorry Paypal but since more than a month there is no disputes on my accounts !! why to keep the money then ? why to pay so much commissions ? why the insurances companies dont pay for it ?

    The most funny in this : I cannot receive any money, some of my clients, opened a dispute, i sent the items recorded to them so they received it but they cannot give me the money back because paypal is blocking my accounts !!! the judge will like this one. i cannot use paypal to pay my fees on ebay !! fuck you ebay too !! you want money for my fees, ask your slut sister Paypal (sorry for my language, but im very pissed off with them).

    just another story ! let’s close paypal and ebay !

    Paypal = Mafia Paypal = we are the king s of the world Paypal = The new testament Paypal = Hitler without the moustache Paypal = WW3

    the way paypal is dealing with their client is completely non sense !!

    they need a new CEO

    Ebay is the same as Paypal : heavy commissions, tells you how you have to sell adn much you have to charge for postage. Sometimes ago, i sold dvds and i had to give free of charge for postage ??? it costed me money to send it (stamp, envelop, my time to go to post office, ink…). If you dont send recorded then you are not covered !! what the point to sell a dvd for £3 : you get nothing , you just lose your time !!

    I stop here because ive got enough to talk about a bunch of idiots which only deserved slaps in their faces.

  151. Turbocad 16 Says:

    PayPal is probably the best online money transaction method. However you have to be very serious and to have a big business in order to be accepted by them.

  152. Pragyan(POPS) Says:

    Indian Express Date 17.02.2010 : Page no:13 Business Review (Down line) Paypal’s Personal Payments suspension to stay for now.

    Paypal, Then company said that it temporary suspended these services to response to Indian regulators, specifically question on whether personal payments constitute remittances into India. The suspension follows the RBIs decision to revise licensing rules. The RBI had asked PayPal to shut shop because PayPal was not a registered company. According to an RBI spokesperson, a company needs to be registered with RBI to offer money transfer services in India and PayPal has not registered. However PayPal can resume operation once it secures registration with RBI.

    ” Personal Payments to and from India will be suspended for at least a few months until we fully resolve the questions from the India regulators.” PayPal spokesperson said on the company’s blog.

    Customers should be able to withdraw their founds to a local bank within the next fews days. In the meantime, PayPal will restore into the PayPal Account of any customers in india who have initiated a recent withdrawal, the spokesperson has said.

  153. dnl Says:

    Wow, that’s really horrible!

  154. 909 Says:

    Wow. This article is the final make-or-break for PayPal and me. I’ve already zeroed out my account and detached my financial stuff, account will be closed immediately. now to find a better processor. Thanks for the heads up!

  155. KillTheMonster Says:

    I am a casual seller. I sold a book on Ebay in Dec. The buyer said they never got it. I knew he had, and had a hunch he may be reselling it on Amazon. I looked around for the book on Amazon and found a likely seller. Not using my real name and address, I asked for pictures of the book he had for sale, as I had taken pictures of the book for Ebay. Comparing the pics he sent to the pics I took I was stunned to see that I was right, it was my book. He also signed his name, the same as the buyer from Ebay. I bought the book. It was sent from the same city as the Ebay buyer.

    Ebay didn’t listen. They constantly cut me off when using the online Live Chat, there is no phone number. They did not want to investigate AT ALL. The buyer claimed a chargeback. I supplied everything I had to Paypal. $17.00 worth of faxes. (the book was only worth 27) I lost the dispute.

    Here’s one thing I haven’t heard anyone talk about. Internet scams and fraud. The FBI has a special section dealing with these kind of crimes. What that guy did to me is a FELONY punishable by years in prison! The amount of the theft/fraud/scam doesn’t matter.

    I’ve filed a complaint at http://www.fbi.gov . You can upload your evidence, photos, receipts… everything. There is also a question about which sites were involved. In other words, the more people that implicate Paypal, and Ebay. The faster this will stop.

    It is my opinion, that Paypal and Ebay are complicit in this fraud as they turn a blind eye and a deaf ear to obvious crimes. There may not be any legal precedent for what Paypal and Ebay are doing, it’s time to write some, make an example.

  156. biggfredd Says:

    Re: update.

    Most CC and merchant account issuers don’t allow you to use your card for your business. A cash advance lets them charge interest immediately instead of after a grace period, and if you have a kickback card of some sort, cash advances aren’t included in your CC use.

  157. Darlene Says:

    Paypal screwed me over too. I bid on some dishes on ebay – from a pattern called Acapulco which hasn’t been made since the ’70s – and the description said “All in good condition, no chips or cracks”. Upon receiving them, 5 of the dishes have chips and 2 cups have cracks in them. The seller refused to refund my money so I escalated it to a claim with Paypal who state”If you pay via Paypal and if the item is not as described you are eligible for Paypal protection” Bullshit.

    Paypal decided in the seller’s favor and I get squat for a refund and I’m stuck with worthless dishes that I can’t even resell on ebay – unless I lie about the description like he did.

    The moral of the story is: if you make a high-end purchase, or any purchase on ebay for that matter, make damn sure you pay by credit card because your credit card company will reverse the charge if there is any discrepancy with the item. They’ve got your back – unlike Paypal who don’t give a damn about you and spend less than a minute making their decision. It also didn’t cost them any money to decide against me because they might have had to do some work and go after the seller to get my money back.

    Paypal blows big time.

  158. Jeffrey Says:

    Hello everyone,

    I often hear this stories. Maybe you should try out AlertPay. Check this: http://www.alertpay.com

  159. bertkoka Says:

    We had the same thing happen with PayPal, almost exactly as you describe… Our business it’s going bust because of paypal…

    “We have observed activity in this account that is unusual or potentially high risk.

    For your protection, we have limited access to your account until
    additional security measures can be completed. We apologize for any
    inconvenience this may cause."

    They have limited the ability of my account to withdraw or send money.

    Invoices, business registration, prof of address tons of prof were sent to lift the limited access, and still our paypal appeal was denied by so called account specialists. Really disappointed….

  160. women's lingerie Says:

    I have very bad expirience with Paypal, I am on eBay since 2005 have a lot of positives all 100% are positives, and Paypal block my money if I recive payment above 199$ for 21 days ! That is horrible, I am paying them 5% per transaction and they hold them for the 21 days ?

    THis is sick. Ive changed them to Moneybookers. Never will use Paypal again

  161. mandy Says:

    stop saying that, paypal does not care of your posts here. I know there are several websites of complaining paypal like paypalsucks.com, its impossible for paypal top executives do not know their exit. The merchants who use paypal obviously could get more business coz paypal is really more convinient then other methods of online payment, or you could list many kinds of payment on your website and let customers to choose. If you think one transaction is not safe, you can require the customer to change a way to pay. You should use more time of verifying each orders, its not very difficult but it takes time for you to get that kind of experience. You see more webs that sell online gaming product working fairly well, you should consider how they work.

  162. Jurek Says:

    Hola a todos, he creado este grupo para hacer un Censo con la cantidad mayor posible de personas que tuvieron, tienen y creen que tendran problemas con Paypal. He sido una victima de problemas con ellos durante mas de 2 años y ya me canse de tanta mentira, fraude, engaños, robo, en fin podria llenar un libro de acciones negativas de Paypal. Quisiera buscar la manera de crear una revolucion ante este problema que esta afectando a miles, quizas millones en Paypal ya que supuestamente los usuarios de todo el mundo superan los 200 000 000 increiblemente, quisiera reunir la mayor cantidad de personas posibles y entre todos buscar la manera de solucionar lo que hasta ahora ha sido imposible.

    Hi all, I created this group to make a census with the greatest possible number of people who had, have and believe they will have problems with Paypal. I have been a victim of problems with them for over two years and already I am tired of so many lies, fraud, deceit, theft, finally I could fill a book of negative actions of Paypal. I would like to find a way to create a revolution against this problem that is affecting thousands, perhaps millions in Paypal since supposedly users worldwide exceeded 200 million incredibly, I would like to gather as much people as possible and together seek how to solve what has so far been impossible. I’m sorry if I have some mistakes in my writing but I don’t know even the English language to perfection Favorite Quotations Paypal tiene que pagar por todo lo que ha hecho, por ultimo me propuso que pagara un saldo pendiente de un robo que me hicieron online hace mas de un año el cual me afecto el credito y el me devolveria la cuenta, bueno resulto que pague el dinero que me habian robado y luego de hacerlo me dijeron que no me darian la cuenta de vuelta y que mi cuenta se cerrara. Todas aquellas personas que quieran unirse son bienvenidas a mi grupo y por favor, dejen todos sus comentarios aqui, quizas valgan de algo algun dia.

    Paypal has to pay for everything he has done, Paypal finally asked me to pay an outstanding balance of a scam that someone online made me more than a year ago which affected me the credit and they would restore access to my account. Well I paid the money I had cheated and after wards tol…d me they would not give me the account back and that my account would be closed. All those people who want to join my group are welcome and please leave your comments here, maybe some day help us.

  163. Euro Says:

    Paypal is a good way to pay online, but it’s made for consummers, not for sellers.

    People think that it’s safer than typing your credit card number

    The commission is paid by sellers.

  164. NotMyPal Says:

    Nearly nine years ago now, my events read exactly like yours. Long story short, they get away with hiding behind their own legal fog and it’d require a class action

  165. Fajas Says:

    We sellers ALWAYS lose. It doesnt matter Paypal or CC.

  166. ritikaa Says:

    Yes, you are very much right, you cannot open a PayPal account for Charity, if your charity is registered in India, same thing happened with me also, I applied a Charity account for my client and after completing all the formalities they just denied for the account. I have a suggestion for you, apply for a normal account with some other website and then use it for your Charity website, I have list of websites who are doing the same thing. You can also try some other Payment Gateways like CCavenue, but in case you are using Vbulletin script, I don’t think so that it may help you. The first suggestion may work for you.

  167. yara - fajas reductoras Says:

    This article is the final make-or-break for PayPal and me. I’ve already zeroed out my account and detached my financial stuff, account will be closed immediately. now to find a better processor.

  168. Frame Says:

    I was supposed to be looking to buy picture frames but stumbled upon your blog and thoroughly liked it. Thx

  169. K Says:

    I don’t know why Paypal still exists. I really cannot believe they are still allowed to do business. Paypal is one way to pay online, when it works. I’ve always had a bad vibe about Paypal but gave it a chance + used it on ebay several times with no problems. But little did I know that eventually I would be forced to sign up for an account to continue using Paypal. Overnight they limit my account. Great way to welcome a new customer! There is no way on earth I would give me any photo id, bank statements or rates notice because quite frankly I don’t trust Paypal. Also I think they treat sellers and buyers equally badly.

  170. Simon Says:

    I had first my account frozen years ago, only just recently have they released my money.

  171. Kelly Says:

    I have used the paypal business account in the past to allow clients to pay by credit card. It’s interesting to note that the majority of the clients actually have established paypal accounts; but if they haven’t used it in a while, almost always there is some sort of limitation placed on the account. The limitation then has to be lifted before any payment is made, which becomes time consuming and a real hassle. I understand the security concerns but there has to be a more efficient method of applying (and then lifting) these barriers. Good story, thanks for sharing.

  172. Herr Kaleun Says:


    thanks for publishing this story. I had my thoughts about paypal and this definitely is the no-go for paypal within my project.

  173. Paypal Bangladesh Says:

    Hi, Thanks for providing this. I am also very close to use paypal in Bangladesh. But thanks now I will think for another alternative.

  174. Debbie Says:

    Paypal has restricted my account and frozen my $900 since they “connected” me to a suspended account. Despite the fact that I had absolutely nothing to do with this account, my money is stuck for the last 6 months now. The customer support hand me off to the next department and finally direct me to sending email to appeals@paypal.com. I followed instructions but my response was an instant automated form email. They will not direct you to the policies you’ve violated and will not even respond to your appeal.

  175. Frame Says:

    If paypal wasn’t so convenient and popular, we’d definitely go with an alternative payment system. I think the fact that the majority of people buying online have a PayPal and/or Google account restricts a businesses choice. Additionally, absent all the problems listed throughout these comments, PayPal is more often than not, convenient. Thanks for the post!

  176. Rick Grossman Says:

    I will remain with paypal as it is the most convenient and secure means of making online purchases. No system is perfect but I do not want strangers to see my credit card number. That alone is worth the risk.

  177. Allan Steinberg Says:

    The convenience of using paypal outweighs the disadvantages as outlined herein. Our clients pay more quickly and the delay in the release of funds does not present a problem.

  178. Deborah Lukow Says:

    Paypal is everything for on line purchases but in the face to face world it means nothing.

  179. Udayan Chattopadhyay Says:

    This is scary! We have implemented the Paypal payment gateway for all transactions on our site, but now I am thinking of going a different route!

  180. Chris Says:

    Good heads up, don’t think we will be using paypal on our site.

  181. Sandeep Says:

    Exactly the same thing happened with my company today. :(

  182. Kelly Says:

    I sell on etsy and my account was limited and they wanted more info, well I gave them photo Id, utility bill, credit card, bank info etc I have NEVER had a charge back or complaint.. after all this I get a email saying denied cannot be appealed they will let me know in 180 days about my money… ya sure wtf is going on now they have all my personal info and I have nothing…

  183. Cap Table Says:

    Paypal is good only for individual or small businesses I guess. There are many disadvantages of paypal like occasional account realted issues, poor currency conversion rate, not proper handling of disputes etc.

  184. Business Loans Says:

    Paypal is literally starting to rip people off with there 3% i heard they want to raise it to 5% which is insane

  185. Jane dixon Says:

    Yes, you need to watch out for your paypal account. Alot of paypal employees dont care about you and will accuse you right off the bat that you are doing fraud. Always, withdraw large amount of money from your bank especially if you are selling valuable items online. That way if they limit your account that money wont stay there frozen. I have encountered alot of people saying that they have at least $500 in their account frozen for months or years because they were accused wrongly.

  186. B Says:

    Yep, Not gonna use Paypal for sure. I was considering for a second until I read this.. FastSpring, I guess is the way to go.

  187. Selina Iddon Says:

    We chose PayPal as our payment processor for several reasons but the main were low fees, the fact that we already knew how to integrate it to the sales backend and that it should be easy to pay them and to affiliates.

  188. Zeta Says:

    Yikes! I was getting stressed reading this article – I would hate to imagine what you went though. Problems like this make it so hard for small businesses – I cannot imagine the damage done by suddenly having your payment processing system (in this case, Paypal) frozen on you. In addition, the “service” you received was below par. Terrible!

  189. Oasis Says:

    This has been one of the reasons I am reluctant to use PayPal as part of my future online shop. I have noted the alternatives on the comments etc. I really feel for you – it must have been stressful and potentially damaging to your business. Best wishes for the future! :)

  190. Mike Says:

    I too have had many problems with paypal, even with the problems I still had to use the for my first company. I’m just really happy companies like Stripe are starting to step up and compete with them :)

  191. DownWith PayPal Says:

    In the same situation as you except I sold on eBay. Provided all the information they wanted, they tell me it all checks out but still going to hold thousands of my money for 6 months. How does this even make sense to them? What can a person do in this situation? Absolutely bloody mad! I can not wait until the day PayPal/eBay go down in flames so I can write them a nice cheeky note laughing at their demise. Worst company EVER!

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