The PayPal Slap - Anyone else have this happen?

[CurtD]

Hi,

I am a long time (6-7 years) Paypal user for my software company.  We pay out affiliates, and contract work through PayPal and allow customers to buy services and software's through Paypal.  We did a big "one day blowout" promotion to get customers and we must have set off a PayPal algorithm or security feature.  We had $8,000 come in on PayPal due to the promotion (another $35,000 through non Paypal merchants) and we immediately had our account frozen.  They decided to put the whole amount of the account into "collateral" or "hold" and charge us a 20% rollover or holdback for 6 months on every charge. 

We have never had one chargeback in 6 years and we have had one disputed case by accident when a client thought she was getting a software package by mail, when in fact it was web-based and she could log into your account.  That is it.  There was no historical or factual reason to take all the money in the paypal account and just freeze it for 6 months.  I called and explained that we are a software company, not gambling or porn, and we use that money for paying bills and vendors.  I said I have very low refund and chargeback rates.  They asked me to fax in my merchant account summaries from my other processors to prove it. I faxed over Authorize.net numbers and summaries right away. 

Now the manager I was dealing with to try and lift at least the freeze on my account won't take my calls and is ducking me.  I am just calling to see if he got the fax and if we can unfreeze even half the money.  I am getting passed around from manager to manager and told we will get back to you.

I had no idea PayPal can just freeze, take your money from your account like that, with no rhyme or reason other than you had a spike in sales due to a big promotion. I asked what I did wrong on the webform and got an email back that I would need a court order or subpoena to get that information..I am not making this up.  I can't believe this is happening.  I thought Paypal actually wanted normal, 100% legit businesses using their services.

I have checked around and people say it is known as the "PayPal Slap" and if they don't like something in your charging history they just do this kind of thing...

Anyone else have a similar story?  I am totally fine with the 20% rolling reserve, not happy, but I can live, but to take all the money out of the account is like saying every sale for the past 3 years is going to be a chargeback. 

I am shocked.

C

[surplusdealdude]

I'm not shocked.

If I were Paypal and your income suddenly went through the roof, I'd assume that your account was hijacked by a scammer who was using it to post fraudulent listings on ebay, reap the money and scram.

Paypal got taken just that way a month ago, when someone hijacked  long-time ebay seller's account and posted 63,000 fraudulent listings at $99 each.

Thy're just being careful.  Next time, might be a good idea to tell them your plans before you set them into motion - financial institutions don't like surprises.

[CurtD]

Good advice!

[spsniper8278]

Thank you for for finally answering my two week old question,I knew if I followed you around long enough I just might get the answer to why the police gave me a call , & why  when I called Pay-pal they told me " we put your account on hold because you had a spike in sales". Didn't I tell you I suspected fraud? "theft by mail". If they would have told us the "TRUTH" from the start , maybe pay-pay would not have gotten so many ugly posts about their holds."Nobody likes getting ripped off"

[JetRanger]

What you have here , is a whole lot of whats known as outright "Corporate Stupidity & Ignorance", PAYPAL, has got to big to manage effictively, and the Bozo's they've hired at the Top, starting at the CEO Level , President and on down are utter morons and have the entire process so **bleep**ed up its pathetic !  I recently just tried logging into my account with a new password, and it wouldn't accept it, even with me entering the security questions, and I called and got in contact with supposedly customer service,, what they call customer service anyway, which is Alaways someone down in the "Phillipines",, makes a lot of sense to be talking to someone in another country, especially as supposedly concerened as PAYPAL is with Security,,, it boils down to hiring CHEAP customer service agents so the Ignorant CEO/President can get their big Bonuses  and perks, is all that boils down to, while providing poor service to their customers, for which they really could careless about !!!!  Their Pay Pal web site, is full of errors and problems, for which their obviously totally clueless about and completely unaware of,, as technologically savy as their supposed to be and so supposedly concerened about security as they Claim,,, next thing you know they'll have us all calling over in Iraq or Afganastan somewhere for customer service talking to who knows ???? PAYPAL has become totally unreliable and completely IN-COMPETENT as a pay provider, with their Corporate Idealogy which is very, very mixed up and they Quite Obviously like to play games with their customers , anything to create and cause more problems, and without much notice. I NO-LONGER have any competence in PAYPAL at all and do not trust them anymore, you can Thanks those up in CORPORATE for all this, they are the very ones to blame who got all this started - it was their decisions after all to try to **bleep** up what was once a good thing !!!!  Thanks - Corporate Morons at PAYPAL !!!!!

[jalexander]

Who do we contact for this I have an upcoming launch myself and have been so concerned with the paypal slap that I've been seeking out other payment providers. If this isn't an issue I would rather just say something ahead of time and make sure everything runs fine here.

Thanks

[cdmgear]

Never had that problem with my credit card processor.  Ever. Or my Bank.  Ever. Of all the payment services I use, only Paypal has held money and/or frozen my account. I still have a Paypal account but I am looking at moving my business to some of the others. I mean, I get calls from my CC company if there is "possible" suspicious activity, but never a freeze, and usually it is large payments or purchases, easily and instantly cleared up with a phone call or email. I have kept Paypal as a convenience to customers who like to use Paypal but lately there is so much negative stuff going on reguarding Paypal that I am going to distance myself from their services. You can call and complain all you want, what really gets large financial institutions attention is lost revenue.

[surplusdealdude]

Well, Paypal is NOT a credit card processor and it's NOT a bank.

They do things differently.

[mikesheanyc]

You think THAT'S bad? Check my story out!

Okay, I have a traumatic brain injury (stroke). I have a credit score near 800. This is because I do EVERYTHING by the book. My  ebay rating is 100% for over 250 transactions.

I made a couple of purchases and paystupidpal  decided to take the payment from my bank account instead of from my credit card. There was not enough money in my bank account to cover the cost so it was sent back. I was charged a   

$20 fee. This caused a check I had written to bounce (adding another $20 fee). This snow balled into a substancal  monetary loss.

After discusing this with a paypal representative they ACKNOWLEDGED THEIR MISTAKE and reimbursed me one half  of my then current costs ($40).   

Out of fear I removed my bank account from my list of payment sources.

Paypal THEN STATED THAT I HAD EXCEEDED MY SPENDING LIMIT AND FROZE MY ACCOUNT.

I can not pay for anything.

I cannot retrieve  the $42 in my paypal account.

I AM HOLDING ANCKLES OVER THIS.

If you don't know what I mean by that,? Try it.

I am so angry that I will NEVER reccomend paybummerpal as a viable means of making payments again.

Furthermore, I will warn folks to keep a close watch on what paypal is doing because they CAN land you in a heap of financial trouble with NO FAULT OF YOUR WON!  

Mike Shea