I'm having a very similar issue. I removed a credit card from XBOX and set up a NEW paypal account specifically for use on Xbox live. The Paypal verification process went through but when I tried to buy something it came back with he "..account is not authorised "message. I spoke to Xbox and the same thing. Its not their problem, you need to contact Paypal to authorize the payment first. This is ludicrous. It makes a mockery of the term "on demand". I dpnt want a credit card and I shouldnt be forced to have one. I emailed paypal and they said they would get back to me in 24-72 hours. S So far this has taken me nearly a week to buy a $5 item online and still I have to wait another 3 days. This is like going to McDonalds and asking for something a little bit different - IE they dont have a clue where to start if it is not in the training manual.
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