Hi, I'm sorry to hear you have had this issue with PayPal, this is a disgracefully regular occurrence with using PayPal, a few lucky ones get away with not having it but it happens far to often, and as you say it is completely unacceptable. I'm currently experiencing the same problem, and I work for a consumer website where we discovered in research, how PayPal do this to loads of people, and they seem to genuinely think their in the right doing it, but of course we know their not, it's terrible service, and PayPal has a number of practices that make them a very badly ran business, like this.
This is the reason why PayPal and eBay's service is so flawed, eBay go on about their feedback service, but while great in some ways, it's ultimately flawed, as people are punished on their PayPal account which could then effect the use of their eBay account even if they have had perfect feedback always. For me, eBay has been ruined somewhat by PayPal, both as a seller and buyer, PayPal have caused so many issues. Many of the sellers and buyers on eBay have much,much better customer service then eBay and Paypal, and they could teach PayPal a thing or too!
I agree that they offer some very bad phone service, the odd staff member has been OK, but mostly their unhelpful and have a bad attitude that reckons they are with in their rights to stop access to our money, which they are in no way at all.
People have tried different things to try and get access to their money back, some have had success others haven't. PayPal are very stubborn with this, but just remember it's them who are going against a good practice of acting. I know the phone staff can be really bad, but as they are from a legal perspective (people have successfully sued PayPal over issues with what they have done to accounts) as well as a moral one, required to give you back access to your money, I found that eventually some PayPal staff started to get the hint and bit by bit released some money off my account, after I kept calling them throughout the day, as I really needed access to my money. If they still insist on not doing it still you might like to mention to them and indeed register a complaint with the FSA (Financial Services Authority), as PayPal do not seem to bothered about good customer service to it's users, perhaps they might not like the FSA looking into it, if they will look into your complaints, if they won't do individuals cases, it's believed they may look at the issues as a whole if they get lots of complaints, so I'm hoping they will, as they must get loads about PayPal! It will be good to hear how you get on, and if theirs any further help that you would like.
