Is PayPal Illegally Witholding OUR Money?

[talkradioguy]

PayPal's complete money-grab and retention of our funds is NOT legal. Hear me out:

If you sell an item, deliver it as promised, the buyer loves it and leaves positive feedback with no intent of asking for a refund, isn't that PayPal's definition of a "good completed sale"? Then, how does PayPal...illegally, imho...get to hold onto the rather large sums of money in many accounts and, if they do release any of it, they do so at a rate of only $500 per month..not the entire sizeable amount?

My business partner and I have actually hired a lawfirm to research the issue and (possibly) sue PayPal for fraud, illegal witholding of funds and...here's the really important one..."conversion". Google that one if you don't understand the law. Apparently, according to our attorney's research, banking laws prevent such a situation from occuring in the first place.

Anyone else have any thoughts on this (I mean, other than "it's their company and they can do what they want"). Apparently...they are breaking the law and need to be challenged in court. I'll let you know if/when that might occur.

[hondamedic]

Good afternoon OMA.

Well, it started out he was mad at PayPal for holding his money.

I don't know how he got the idea there was a way, I've read that "Conversion" clause a dozen times and it's lawyer "Double-Speak" to me, if he presented the info to a law firm and they said there was? As I posted, you and I were looking at a class action suit in late June last year and all the links there are dead ends now. This one, Freed & Weiss-PayPal Holding Money has been ongoing since '08. This one, Filed Feb. '02 didn't change anything.

My advice to TRG remains the same, as long as it isn't costing him a penny & his law firm thinks they stand a chance, go for it. Just don't get so riled up about it as many think, myself included, it's a dead end avenue.

[komokwa]

No argument this policy problematic and disliked by everyone. But as stated many times PayPal is a money transfer firm and needs to protect itself. If you deposit your sisters check into your bank account the funds aren't available for up to ten days, no?

The problem I have is when long time continuous use subscribers with a perfect track record are slapped with holds. It's like having a 10 year perfect 850 credit score with all three credit reporters and you can't get a loan on a used car.

what if you wire money into your sisters account....

isn't that available right away.??

isn't Paypally that electronicly quick ?( save for echecks..)

I hear ya about the long term subscribers,

We've seen many posters saying they've been here selling for years and have lots of sales and 100% feedback.

But ebay & PP have very short memories, and what you did 5 years ago...2 years ago...is of no concern to them , as far as the hold they just slapped on you now.

Even a CC companies credit history doesn't go that far back.......and Pay - it's our money until we tell you it isn't - Pal...is no credit card company !!

[hondamedic]

Good afternoon Komo.

Western Union® Terms and Conditions 

Service availability depends on certain transaction conditions including the Service selected (including the special terms applicable to each Service, as set forth below), amount sent, destination country, currency availability, regulatory issues, identification requirements and location hours (collectively, "Restrictions"). The designated recipient ("Receiver") may generally receive funds sent by a Western Union consumer ("You") at Western Union agent ("Agent") locations in the Expected Payout Location. For transactions sent within the U.S., the Expected Payout Location generally means any Agent location in the destination state You identify, or an adjacent state.

Seems Western Union uses the same gobbly-goop PayPal does and uses a disclaimer that the recipient may recieve the funds. Maybe not?;-)

[ducmarc]

PayPal is acting as a "banking" entity.  They either need to follow regulations of an actual banking facility or a credit card facility. Since they "move" both around, using cash through bank accounts and payments through credit cards, then they should be regulated to follow the rules of banking when using banking accounts are used for payment and then seperate rules when credit cards are used for payment.

I say "talkradioguy" has a very valid point.  Even though we all sign up to use PayPal, and we click that "button" that says we agree to all terms, it doesn't make it right because that is the only means of "banking" Ebay really allows. 

And if people stick together, including involving a lawyer, then just maybe changes will be forced to make it "legal" to follow Federal Regulations since they are acting as a banking entity.

Look at it this way, is PayPal FDIC Insured?  What would happen if they withheld a lot more money than we are seeing from completed sales and all of sudden Ebay goes bankrupt and closes it's doors, where will your money be then - where will your protection be? 

Others have stated to "raise the limits" and that is something that can be done.  I do know, depending on how much you run through PayPal, you are required to enter a Tax ID if you have a company or your Social Security Number if you don't.  If you don't enter either one, then PayPal can hold your money.

On the other hand, just like a bank, If a sale is completed and the buyer has received it - PayPal technically is not allowed to withhold your money for more than 5 business days, and for credit cards - no more than 3 days. 

I can see the holds placed on Brand New Sellers, but you have a feedback of 222, so it doesn't make sense as to why they are holding your money.  The other kicker is, when you raise limits, it puts you into a higher fee bracket and in a way it's kind of like racketeering.  PayPal, just like any other bank should not be able to hold your funds, it doesn't belong to them. Any interest they earn on your money, technically belongs to you, not PayPal.

I say if the lawyer is not costing much, then have at it, there have been lawyers that have been able to put together class action law suits from companies who have done the wrong thing.  If Ebay is to keeping hiking their rates across the board, then Ebay needs to offer other methods of accepting payment that is suitable to the different levels of sellers. 

It's an interesting thought, but I wonder if the kick back rules apply to Ebay and PayPal.  Ebay is under investigation now and their stocks are down, I think it's only a matter of time before the fees will go up higher due to fines Ebay will probably have to pay. 

Let  me know what your lawyer has to say. I'd be interested in knowing.  Good post!

[kali-the-pup]

PayPal is acting as a "banking" entity.  They either need to follow regulations of an actual banking facility or a credit card facility. Since they "move" both around, using cash through bank accounts and payments through credit cards, then they should be regulated to follow the rules of banking when using banking accounts are used for payment and then separate rules when credit cards are used for payment.

Look at it this way, is PayPal FDIC Insured?  What would happen if they withheld a lot more money than we are seeing from completed sales and all of sudden Ebay goes bankrupt and closes it's doors, where will your money be then - where will your protection be? 

Hi ducmarc :-), you bring up some good points. PayPal is not recognized as a Bank by the Federal Government. Having said that, Paypal is subject to some of the rules and regulations governing the financial industry including Regulation E, Electric Consumer Protections, and the USA Patriot Act. 

Funds that PayPal touches as they pass through a PayPal transaction are held in a bank. Therefore, PayPal funds are covered under Federal Deposit Insurance Corporation (FDIC) insurance that also applies to a traditional bank account, except for PayPal's interest-bearing, money market accounts.

Like you, I do not appreciate all of Paypal's policies... mainly the intertwining of eBay Policy and Paypal Policy, but at the end of the day, eBay bought Paypal for that precise reason.

It will take a major move by the Feds to get anything accomplished, by means of redefining PayPal's status... but these days the Feds do not appear to be able to get anything accomplished, well nothing GOOD anyway's. 

[doiglestuff]

I'm used to looking up teminology while researching ebay treasures and also policies. But TRG's statements are the only conversational posts that require me to access the dictionary.

This was an interesting additon to one of the definitions:

"Raison d'être is a beer brewed with raisins by Dogfish Head, DE."

I guess the old curse has come to fruition.

We do live in interesting times.

Thankfully, we all have the time, freedom and electricity to sit and argue these points. For the time being. I wish everyone would untwist their knickers.

[blue-vintage]

PayPal is acting as a "banking" entity.  They either need to follow regulations of an actual banking facility or a credit card facility. Since they "move" both around, using cash through bank accounts and payments through credit cards, then they should be regulated to follow the rules of banking when using banking accounts are used for payment and then seperate rules when credit cards are used for payment.

I say "talkradioguy" has a very valid point.  Even though we all sign up to use PayPal, and we click that "button" that says we agree to all terms, it doesn't make it right because that is the only means of "banking" Ebay really allows. 

And if people stick together, including involving a lawyer, then just maybe changes will be forced to make it "legal" to follow Federal Regulations since they are acting as a banking entity.

Look at it this way, is PayPal FDIC Insured?  What would happen if they withheld a lot more money than we are seeing from completed sales and all of sudden Ebay goes bankrupt and closes it's doors, where will your money be then - where will your protection be? 

Others have stated to "raise the limits" and that is something that can be done.  I do know, depending on how much you run through PayPal, you are required to enter a Tax ID if you have a company or your Social Security Number if you don't.  If you don't enter either one, then PayPal can hold your money.

On the other hand, just like a bank, If a sale is completed and the buyer has received it - PayPal technically is not allowed to withhold your money for more than 5 business days, and for credit cards - no more than 3 days. 

I can see the holds placed on Brand New Sellers, but you have a feedback of 222, so it doesn't make sense as to why they are holding your money.  The other kicker is, when you raise limits, it puts you into a higher fee bracket and in a way it's kind of like racketeering.  PayPal, just like any other bank should not be able to hold your funds, it doesn't belong to them. Any interest they earn on your money, technically belongs to you, not PayPal.

I say if the lawyer is not costing much, then have at it, there have been lawyers that have been able to put together class action law suits from companies who have done the wrong thing.  If Ebay is to keeping hiking their rates across the board, then Ebay needs to offer other methods of accepting payment that is suitable to the different levels of sellers. 

It's an interesting thought, but I wonder if the kick back rules apply to Ebay and PayPal.  Ebay is under investigation now and their stocks are down, I think it's only a matter of time before the fees will go up higher due to fines Ebay will probably have to pay. 

Let  me know what your lawyer has to say. I'd be interested in knowing.  Good post!

We are in agreement.

But I warn you, there are those here that must have the last word on every freekin thing;-)

[magsmg101]

I am just a part timer who had a great August sales month, I then skimmed off the $500 allowed per month to my checking account. 

Then was notified that pp would be holding funds for 21 days until 1) I could prove shipping ( which I do on line @ pp site) or 2) buyer leaves positive feedback ( something over which I have no control)

The timing of the notice left a bad feeling.

I have sold several items over the year and transferred money

before without a problem  seems like like last month they want to reign me in.

[komokwa]

Good evening Hondamedic:

I said wire money into your sisters account.

I meant a bank to bank wire transfer , or even an internet transfer, directly into her account.

Here that action clears the funds in under an hour .

That can be done in the States too, right?

Would the results be the same where you are ?

[hondamedic]

Sorry for the misunderstanding, Western Union can wire money directly into a checking account. As far as a bank to bank wire transfer, my company does it all the time, it's instantaneous as far as I know. And the payroll company wires an instantaneous transfer to my checking account every two weeks.

But I'm missing your point on PayPal holds. I'm unsure we're discussing the same thing?

Let's try this. A buyer wins a watch, this one Link..

Pays immediately with PayPal. Seller prints label through PayPal. Seller uses funds to buy 4 Link. Empty box arrives at buyers home.

Let's try this. A buyer wins a watch, this one Link..

Pays immediately with PayPal. Seller prints label through PayPal. Seller uses funds to buy Link Empty box arrives at buyers home.

In both cases eBay's Buyer Protection tells PayPal to refund the buyers money. In both cases there's no money. PayPal's BOT's determine which one get's the "hold"...

[crazymancreations]

"In the US, although PayPal has an extensive User Agreement, PayPal is not directly regulated by the U.S. federal government, because it serves as a payment intermediary. PayPal is regulated as a money transmitter, 31 C.F.R. 1010.100(ff)(5). PayPal is also subject to state regulation, but state laws vary, as do their definitions of banks, narrow banks, money services businesses and money transmitters." . . . Wikipedia

The states in which PayPal resides are also accountable for the classification and allowances given.

By no means, like some others, am I a fan of PayPal's 'tatics' but it looks like they know how to play the 'game' . . . . . . . . . . the 'game' of...WORLD DOMINATION!

or

. . . stay within certain parameters to keep a 'loosely' controlled classification so 'we' can make as much money as possible . . . now there's a lawyer for ya!

"Crazy Man"

[taadaa58]

Just wondering,,,does Paypal do the same thing to sellers on other selling sites such as Amazon,Bonanzle,etc?  I have no idea since the only other sites I sell on are Craiglist and a local site.

[komokwa]

I'm sorry Hondamedic , I was off topic....kinda.

You mentioned a check that the bank holds to protect itself against lack of funds to cover the check.

I considered that paypal recieves the full amout electronicly , so since the funds are all there , the reason for thier ' hold' is different.

BTW... in you examples , would not an empty box trigger a SNAD by the buyer...causing a further hold on the funds ?

[hondamedic]

BTW... in your examples , would not an empty box trigger a SNAD by the buyer...causing a further hold on the funds ?

 In both cases there was no hold and the monies spent by seller. That was my point about 21 day holds, if PayPal BOT's missed either one PayPal now has to front the money until they can recoup the loss. If they put a hold on the money the collect interest.

Which makes more business sense?

[artie-chicago]

2minutes2midnight : "I suggest you review Paypal's policies and Account Options prior to posting erroneous information to the Part-Time Board. People come here seeking sound advice, not misleading opinions."

You definitely understand and have responded appropriately to TRG.  This is another case of a person who can hear but does not want to hear.