I had just signed up for a PayPal account too, and was in the process of verifying my bank account. Now I think I don’t want to get involved with these guys.
Mark Perkel learned this the hard way, when PayPal gave his account “limited” status after deciding it didn’t like some of the content on his website. Furthermore, right before it shut down his account, it reversed a deposit that one of his clients had transferred to his PayPal account, but it did not return the money to his client’s bank account after removing it from Perkel’s bank account.
According to PayPal’s User Agreement, (It’s probably the Accessible Use policy regarding adult material that he violated.), if it chooses to make your account “limited,” (PayPal has the authorization to do so at any time based on its own discretion), it can and will hold the funds in your PayPal account for 180 days.
Turns out that money is in limbo until Perkel writes PayPal in a secure email on its website and asks for this to be done explicitly. This is despite the fact that he asked them to do so over the phone. (And why wouldn’t they have already done so anyway? – if they were reversing the transaction, when the money left Perkel’s account, it should have gone back to where it came from.)
PayPal claims that they hold the money for 180 days to “protect ourselves from potential reversals” to the accounts. But there’s a free speech issue here – why is PayPal going around making judgements about it’s customers’ websites anyway? Who’s going to be next? Is your PayPal account something you don’t want to keep too much money in at any one time, since they can freeze your account and hold it up for 180 days?
These are the questions going through my mind after listing to this MP3 of Marc Perkel talking to Paypal.
If you’re listen to the MP3, and in a hurry, the relevant portion is at about 6 min 50 seconds into it. But if you’ve got a minute, listen to the whole thing. It’s pretty interesting.
So Perkel may have violated their user agreement, but closing his account without giving him a chance to take his money out, and then holding on to not only the money he had in his account, but the money his client had transferred to him the day before the account was closed doesn’t seem right.
Marc’s started an anti-paypal website, to let people know about his experience, but I’m not telling you to boycott these guys necessarily. I just want you to know about this so you can make your own decision. Maybe there’s a perfectly good reason why PayPal works for you. Fine.
(This MP3 might also have some great samples in it for you Dee Jay/Audiophile types. Don’t say I didn’t tell ya 🙂
Here’s some information for anyone who is interested in the news story about PayPal and their lawsuit settlement over freezing customer’s accounts:
PayPal settles customer suit
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