Problem Solved: You can no longer do business with PayPal

I am posting this info to hopefully help others (Other older threads were closed).

I help operate a small water district that collects money for the water used--suffice to say we are a legitimate business, collecting money for legitimate purposes. We wanted to allow customers to pay using a credit card, so we created a business account with PayPal. We planned to use their "Request for Money" feature where you email the customer a Request for Money that they can click on and pay the bill using PayPal. On our very first transaction, PayPal collected the funds and then suspended our account cryptically saying " You can no longer do business with PayPal". They also say they will hold our money for 180 days at which time they would make a determination as to how much we would get.

We called customer service and they could give no further info or reason why we were suspended, but they said they were forwarding to customer care and that we would hear from them within a week. Nothing for a month.

I finally had enough and went to the Consumer Finance Protection Bureau (CFPB) site and filed a complaint. I explained the situation and attached all records of the customer's bill, our request for funds, the payment confirmation, and the suspension email. I also detailed our call to customer care (dates and times for all) and how nothing happened.

Two weeks later, the situation was resolved, PayPal lifted the suspension, and our funds were released.

First, shame on PayPal. They are holding funds, certainly using them as float and making money.

Second, if you are legit, call PayPal, jump thru the hoops and get them to forward your issue higher (get a tracking number if possible--I did not). Document the date and time of the call. Wait the requisite time.

Third, wait no longer than the time they specify (when they say you will hear back--make sure it's days or business days). And then file a complaint with the CFPB. consumerfinance (.gov) click on Submit a Complaint (you don't have to create an account, but you will have to do so to see the response) You will have to pick some categories for your complaint. I used the following:

PRODUCT :Money transfer, virtual currency, or money service

ISSUE: Other transaction problem

You can attach documents. I attached the original bill, and PDF prints of all emails received during the process along with the PDF of the PayPal User Agreement.

I think we would have gotten our money 180 days later, but this sped things up. I think they have a legit method of determining higher fraud-prone transactions, but they are not looking at the business type before making automated suspensions. Further, their customer support has no information, and they simply do not respond. They hide behind the one-sided User Agreement which gives them the right to do this. But when the CFPB calls, they do respond. In fact, the CFPB has them listed in their list of businesses you will pick from (make sure to choose the one listed in your User Agreement).

Here is how PayPal responded:

Company's Response

On November 19, 2020, you created a PayPal account ("Account") at which time you agreed to PayPal's user agreement ("User Agreement"). On June 9, 2021, you sent a request for payment of $300.00 to ***@gmail.com. On June 12, 2021, you received the payment of $300.00 (“Payment”), less a processing fee of $9.00, bringing the total amount of $291.00 deposited to your Account balance. In order to prevent fraud and help ensure the safety of the PayPal system, PayPal routinely reviews account activity. On June 12, 2021, we carefully considered a number of factors that, when viewed together, indicated there was a high level of risk associated with your Account. Specifically, you sent a unilateral payment request, which is a payment request sent to an unconfirmed email address and then later received Payment from that email address as detailed above. In our experience, payments received in this manner more frequently result in payment reversals like buyer complaints, disputes and chargebacks. As a result, we limited your Account and decided to cease offering our services to you as permitted under the Restricted Activities & Holds section of the User Agreement. This action was taken as we were unable to mitigate the risk associated with your Account with the information available to us at that time. We notified you of this through email on the same day. Pursuant to the aforementioned section of the User Agreement, PayPal may hold your account balance for up to 180 days if reasonably needed to protect against the risk of liability and refuse to provide PayPal services to you in the future. Accordingly, we notified you that your remaining Account balance will be held for up to 180 days, pursuant to the Restricted Activities & Holds section of the User Agreement. Upon receipt of your Complaint, PayPal conducted an additional review of the limitation and your Account. We determined with the information available to us at this time, the level of risk associated with your Account is acceptable. Accordingly, on August 11, 2021, we restored full access to your Account and your Account balance. We apologize for any inadequacy you experienced when contacting PayPal's Customer Support. We have provided appropriate training to our representatives to improve this process for similar situations that may arise in the future.

DESCRIPTION OF NON-MONETARY RELIEF

On August 11, 2021, PayPal restored access to your PayPal account and balance.

HOPE THIS HELPS YOU.