Paypal Review

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I have been a loyal customer of PayPal since 2002 and what has occurred to me this past month is extremely devastating. Until recently we have used PP for all our eBay transactions as well as PayPal checkout; pleased with the service, we decided to additionally move all of our credit card processing to PP. After a month or so, without any notice PP changed our minimum reserve from $1,000 to $20,000 + 5% of every transaction for a total of $35,000. After calling PP to see how this could be reversed, I was referred to a risk agent who proceeded to further increase my minimum to $35,000 and a 10% rolling reserve. When I asked why this was happening he told me that our account is “too risky”. If this were the case, why would I be allowed to process in the first place? This is an extremely unfair tactic; to allow merchants to process transactions and then freeze all their working capital due to some change in perceived risk. What risk? We have almost no chargebacks in relation to fraud and we have a below average rate of return for our industry. But yet Paul from PayPal made a decision that will have a drastic impact upon our company. And there is no one to talk to; Paul made it clear to me that only he could make any decision on my account. And he is right; when calling PayPal and trying to talk to a supervisor regarding these issues, I was told only Paul could talk to me. This is a very shady operation that intimidates its merchants and does not allow them any recourse.

The big question here is, why allow “risky” merchants to use the service and then starve them to death by holding all their money? These are extremely unfair and shady tactics. PP does not tell you that you are considered a risky account until you have real funds in the account and then it is frozen and held by PP. Why not limit the “risky” merchants to a maximum allowable amount or warn them beforehand that processing above a specific dollar amount will result in additional funds being held within the account? This would be an acceptable way to deal with s-called risky accounts rather than allowing them to process payments and then freezing everything.

The only conclusion I can come to is that PayPal has decided to hold funds in its accounts and reinvest those funds or collect interest on them in order to make a profit and cover company losses that stem from fraudulent accounts or irresponsible merchants. Legitimate merchants, such as myself, are made into victims at the expense of PP’s inability to differentiate between legitimate and illegitimate merchants.

I am pretty sure that I am not the only victim here. And since PP is not a bank, I have absolutely no recourse in order to recover the funds that have been unfairly frozen in my account. And regrettably, until PP is seriously challenged by another payment option for eBay, they will continue to resort to this type of activity. There is a growing community out there that is fed up with the way PP manages their accounts and eventually that group will force changes to the detriment of PP’s business and/or serious legal consequences.

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