PayPal Nightmare

[Jondor]

About a year ago, I became so disgusted with Bank of America that I closed my checking and savings accounts and went to a new model. I keep my savings and investments in an account at Schwab, and have kept my cash in a PayPal account for which I have a debit card. So far, this has worked well for me. Until last week, that is.

Out of the blue, on Wednesday morning I received an email from PayPal stating that they were limiting my account until they could verify my personal information and perform a credit check. No problem, I thought, some sort of flag probably went up and they are just protecting my security. I had an inbound funds transfer for $5000 due to clear the next day, so I was glad they were on top of things.

(Let me just say that I have done nothing shady whatsoever with this account. I have used it for lots of purchases, sometimes in spikes, but have not done anything out of the ordinary.)

Later Wednesday, I received another email stating that my credit review was complete and that they could "no longer have me as a customer" and that my account was closed effective immediately. To make matters worse, any funds in the account would be held for 180 days and no further transactions allowed. At the time, I had about $1500 in the account, prior to the incoming transfer (which had not cleared at the time of the email.)

The next morning, as if all this wasn't bad enough, I got an email from PayPal saying that my $5,000 transfer was complete. So let me get this straight, you are going to close my account for no reason, hold the funds on deposit for six months and not allow any further transactions, except for one additional deposit of $5000, which you also won't give back. How can they complete a transfer on a closed account? This doesn't seem legal! Help!

[Ravenous Wolf]

About a year ago, I became so disgusted with Bank of America that I closed my checking and savings accounts and went to a new model. I keep my savings and investments in an account at Schwab, and have kept my cash in a PayPal account for which I have a debit card. So far, this has worked well for me. Until last week, that is.

Right now I have checking and savings accounts from four different credit unions. All of them are free checking. And I have one from a bank. I used to have a lot more but whittled it down to only doing business with the ones that offer free checking and decent customer service.

If I ever had a problem, it would just take a moment's notice to move everything out from one account to another. And this situation has always been great for me because I know the quality of each place and I have a lot of confidence in them.

That doesn't answer your question but I wanted to give another perspective about having more than one place that I do business with.

[Radio_Guy]

Technically, if you have bad credit a bank can close your account and place restrictive holds on your deposited money for a long period of time.

However, Paypal is not really a bank, they are a money services company, so they are not subject to banking rules and laws per se. BUT, when inspectors come from a Federal Office and want certian info or compliance with certian instructions, they are the 800 pound gorilla, especially in this post-9/11 world.

I suspect that

1. they are concerned that you are one of those thieves who target paypal customers. They are holding you money waiting to match up your unusual transactions with a claim from one of their legit customers.

I have used it for lots of purchases, sometimes in spikes, but have not done anything out of the ordinary.)

Seriously, your descriptions of your transactions are probably not normal for PayPal and their fraud checking programs flagged your account for further review.

and

2. Fed compliance: Any cash transaction over $2,999.00 is subject to review by the U.S. Treasury and a basic mini-currency transaction report is created and housed in a financial institutions database. (A wire transfer is CASH in the eyes of the Treasury. Your $5,000 transfer probably finalized the decision to mess with you: Remember they receive notice of an incoming transfer long before it clears and is available for withdrawal.)

Have you tried to call them and nicely explain ask what is going on and how you can get your money? Get everyones full name and extension - be nice - If you let your anger show through they will cop and attitude and not help you as much. Here's the number:

PayPal Customer Service Agents are available to help you during the following times:

4:00 AM PST to 10:00 PM PST Monday through Friday

6:00 AM PST to 8:00 PM PST on Saturday and Sunday

Call us at: 402-935-2050 (a U.S. telephone number)

Yes PayPal can be horrible,

however, you can fix this with some phone calls, money trail documentation and jumping through a few hoops. Worst case, your AG can help.

Then get a real bank/credit union!

Good luck,

[DHK]

I had the SAME thing happen to me (except that I don't hold my funds in my paypal account).

I was able to open up another account with a new email address and transfer everything to it (I had to wait 2 months for the new debit card, but oh well).

I STILL haven't figured out what the deal was. I've moved on.

I think that I changed my banking information too many times (especially since I registered my DBA with paypal at the time) so they probably thought that with the changes in banking that I had been up to no good.

Sorry to hear that you're having troubles.

[LNY]

Are you sure the original email was not a phishing attempt? Was it addressed to you by name or did it say "Dear PayPal customer"?

[Anonymous]

Check out the website in my sig - then click around you'll find PayPalSucks.com

That's all I have to say about that.

[Ravenous Wolf]

Then get a real bank/credit union!

I didn't want to be the first one to say that... But it is definitely true...

[Ravenous Wolf]

Check out the website in my sig - then click around you'll find PayPalSucks.com

That's all I have to say about that.

I didn't want to be the first one to say that... But it is definitely true...

[LNY]

I don't know... it really sounds to me as if the OP has been phished. That initial "we need to verify your personal information" email is a classic phish. I get several of those a week.

[Radio_Guy]

I don't know... it really sounds to me as if the OP has been phished. That initial "we need to verify your personal information" email is a classic phish. I get several of those a week.

This may be true, regardless, PalPal has to investigate and give him back his money once he can prove it belongs to him and is legit...

[DocDon]

PayPal wanted to do a credit check for what reason? To extend credit? Me thinks it was a Phish too.

Hopefully you didn't give any info - if you did, start changing everything.

[ocn2000]

It makes you wonder if it is not just better to carry cash? UNLESS you are in a rough neighborhood and stand a real chance of getting robbed. If you are using a debit card, you are using your own money anyway. What ever piddling interest rate you gain by having your money in deposit can be worth it. I know that is not a solution to your immediate problem.

[BanditMan]

Oh my god. Not another Paypal victim. You will never see your money unless you take Paypal to court. And don't listen to them if they say that you may only sue them in the county/state that that THEY reside in. You can sue them in ANY court. I know people that have gone through this. It will be the absolute worst thing that you will ever go through to get your money back.

I use them for Ebay only! I have a separate checking account that I use just for Paypal and I keep the balance at $0.00 unless I buy something that needs to be paid through Paypal. If you have Paypal linked to your main account and they decide out of the blue that you are suspected for fraud and close your account when you have transfers pending, they will take the money and sometimes huge sums of money straight from your bank account. DON'T TRUST THEM! They are not a bank but act like one. They are NOT bound buy federal laws like banks are. Please take grim's advise and read www.paypalsucks.com before you open any account with them and protect yourself!

A FYI about Paypal, NEVER sign into your Paypal account from another computer other than the one or IP address that you used when you opened the account with. They track everything! It red flags your account if you do. And then the nightmares will begin whether you are transferring large sums of money or not.

Edit:

You will have to follow what they say and ask for. They will ask you to fax a copy of driver's license, SS# ect. Do it and keep records of everything you send to them and all emails and letters. You will need them when you take them to court. They DO NOT intend on giveing your money back! That is just a runaround to get you tired and give up. look around the paypalsucks web site for a class action suit. They have them quit often and see if you can get in on it.

Best wishes.

[DocDon]

A FYI about Paypal, NEVER sign into your Paypal account from another computer other than the one or IP address that you used when you opened the account with. They track everything! It red flags your account if you do. And then the nightmares will begin whether you are transferring large sums of money or not.

I've been logging in from all over and never once had a problem.

There's something much more goofier (sinister) going on w/ PayPal if this wasn't a Phish.

[LNY]

If the OP (who for some reason has not returned to answer any questions) gave a phisher all his financial details in response to a "we need to verify your information" email, PayPal is not at fault here, nor are they obligated to give him any money that's gone missing. People are told over and over again not to reply to these emails, but still they do. This might be one of those times.

However, WE DON'T KNOW. So until the OP comes back to respond to his own thread, we should refrain from assuming PayPal is in the wrong. They very well might be, but WE DON'T KNOW.

[BanditMan]

Your correct. Paypal is not always at fault. .05 percent of the time that is. From what I know of Paypal and from what I have personaly seen from my friend going through it, DON'T TRUST THEM!

Also, you might want to read here....

http://paypalsucks.com/PayPalFormerEmployee1.shtml

http://paypalsucks.com/PayPalFormerEmployee2.shtml

http://www.paypalsucks.com/PayPalWhistleBlower1.shtml

Use your own judgement. Just because your account is still in good standing now even though you have logged in all over don't mean that you will never have problems. Taken from an ex employee's own words, your account will be flaged.

[DocDon]

I'd take anything by an ex-employee of any job with a grain of salt. It's like the real "nasty truth" of Wal-Mart as told from "former employees".

PayPal definately has issues, but those are being addressed in the courts - not some blog....

[LNY]

BanditMan, you're assuming a lot. Why not wait until the OP returns to tell us whether or not he responded to a phishing attempt that began with something like "Dear PayPal customer" instead of his name, before we turn this into a full-on "PayPal Sucks" thread? PayPal may not have anything to do with this at all. You're automatically assuming that he's a "PayPal victim" when he could quite easily be a phishing/fraud victim. Which could be far, far worse for him.

[Jondor]

Well, for sorry for the long interval guys. Thanks for your responses.

This was not a phishing scam. PayPal flagged my account after a family member used their PayPal account to send me some cash, but improperly noted the transaction as payment for goods. PayPal contacted both of us, got the full story and said, "Don't do that again."

Apparently, though, they were not done. Soon thereafter was when I received their letter about all the identity verification they needed, plus the notice that they were going to run a credit inquiry on me. However, I never asked PayPal to extend any credit to me, so that seemed kind of funny.

When they wrote to say that the account was being closed, the reason they cited was the info found on my credit report. I have been rebuilding for the past 18 months and am not currently late on anything, but that is what they told me. Later that day, after the account was frozen, they completed an inbound transfer from my bank which I had scheduled a week before for $5,000.

So the series of events was thus:

1. Flagged but harmless transaction

2. Demands for personal info, confirmed via phone with them

3. Personal info provided per requests

4. Credit inquiry

5. Account closed, funds seized for 180 days

6. Inbound ACH transfer completed for $5,000 (also seized, not able to be reversed by my financial institution)

I am now in limbo with this while I try to figure out a course of action. My subsequent calls to PayPal haven't achieved much, and I haven't been able to escalate to anyone willing to help me.

[LNY]

FINALLY, Jondor!! Now we can advise properly.

Is there anything in the fine print anywhere that allows them to hold on to your money for 6 months at the slightest provocation? Or that you need to have a certain credit standing to use your own money? I mean, it's not like they extended credit to you, in which case they can simply choose to stop doing so. Was there any kind of fraud alert on your CR?

[Radio_Guy]

Jondor,

IMHO: You need to keep trying buy SLOWLY turn up the heat in your calls to PayPal. Tell them you understand that they are trying to protect themselves and their customers but you've proven that you are not a person with neferious intentions so they should give you your money back.

Tell them you will start calling the regulatory agencies for help if they don't offer you an acceptable method of proving your innocence and getting your money back. Tell them they will be liable for your personal damages because they won't let you have your money for living and that you might even pursue a civil suit.

You might need to send a CMRRR to the CEO explaining the situation and requesting his/her help resolving it.

PayPal has the right to protect themselves, and that includes closing your account if they think your credit rating or transaction history suggests you will be a risk. However, they have no right to hold your funds for an unreasonable length of time, (Generally EFTs can be held for 2 weeks.) If they close your account they have to close it, that means give you your money back. (Regardless of what any unconscionable contract might say.)

Also, contact your local Consumer Affairs office of the local government they will probably have a person who is somewhat knowledgable about PayPal, if not call the State AG.

Good luck.

[Radio_Guy]

I just looked over the Paypal Agreement.

According to their own agreement there are bunches of reasons why they can't hold your money.

The most important is that they can only hold your money if a transaction is disputed. None of your transactions are disputed by you or the EFT sending party.

Also, your bank from which you sent the money can get the $5,000.00 back. There are Federal regulations that govern this, they are way to lengthy to go into here but basically either PayPal has to give back the money to them or prove they delivered it to you as ordered via the ACH system.

Good luck.

[LNY]

I'm a little confused as to how his credit rating has any bearing on an account on which no credit has ever been extended. This is, for all intents and purposes, a savings account. If for whatever reason they think he's up to no good, they can close the account and return his money... unless they have strong reason to suspect (this takes some kind of proof, one would imagine) that the money is ill-gotten gains (fraud, etc.) The transaction in question is between himself and a family member, and both parties to the transaction have confirmed that it was an error.

[DHK]

I'm a little confused as to how his credit rating has any bearing on an account on which no credit has ever been extended. This is, for all intents and purposes, a savings account. If for whatever reason they think he's up to no good, they can close the account and return his money... unless they have strong reason to suspect (this takes some kind of proof, one would imagine) that the money is ill-gotten gains (fraud, etc.) The transaction in question is between himself and a family member, and both parties to the transaction have confirmed that it was an error.

NOT to defend PayPal, but most financial institutions check credit before opening savings or checking accounts. The reason is because you are being granted ACCESS to the institution. You can OVERDRAW these accounts. You can write bad checks and commit fraud.

However, I do wholeheartedly agree that if the institution isn't going to keep the account, the funds MUST be returned within a reasonable period of time.

Again, I had received a similar notice from PayPal as well. I was furious about it, but I had never kept any funds in the account - so I didn't have to worry about that.

[LNY]

You can't write checks on a PayPal account. And if you attempt to use your PayPal debit card without the funds to cover the transaction, it is automatically denied. Even if it's a dollar. So there can be no bad checks or overdrafts for them to worry about.

I stand by my original confusion.