Banned From PayPal! (Permanently “Limited”)
Posted on April 5, 2008
Filed Under PayPal
Last week while busy at my ‘day job’ I got the following email on the iPhone:
(slightly edited for brevity)
Dear Randy Brown,
The PayPal User Agreement states that PayPal, at its sole discretion, reserves the right to limit an account for any violation of the User Agreement, including the Acceptable Use Policy. ….
We are hereby notifying you that, after a recent review of your accountactivity, it has been determined that you are in violation of PayPal’s Acceptable Use Policy regarding your sales of Subscription Services … Therefore, your account has been permanently limited.
You will need to remove all references to PayPal from your website(s)
and/or auction(s). This includes not only removing PayPal as a payment
option, but also the PayPal logo and/or shopping cart. We thank you in
advance for your cooperation. If you have any questions, please contact
the PayPal Acceptable Use Policy Department at aup@paypal.com.Sincerely,
PayPal Acceptable Use Policy Department
PayPal, an eBay Company
My first gut reaction that this was just another phishing attempt, so I quickly logged into my PayPal account only to find the following:
We recently reviewed your account, and we need more information about your business to allow us to provide uninterrupted service. Until we can collect this information, your access to sensitive account features will be limited. We would like to restore your access as soon as possible. We apologize for the inconvenience.
Why is my account access limited?
Your account access has been limited for the following reason(s):
Mar. 27, 2008: In accordance with PayPal’s User Agreement and Acceptable Use Policy,we have closed your account. Your funds may be held for 180 days from the date of your last transaction. After 180 days, you will be able to access your funds by requesting an online bank transfer or, if applicable, a check from PayPal. Please update your address or bank information as we cannot be held responsible for checks issued to an incorrect address. We do ask that you please remove reference(s) to PayPal from your site
It took me only a minute to realized something I never even thought was possible:
I was banned from PayPal!
All the work I had done in the last year building my Premium Membership income to over $5,000/mo. was gone! That’s it, game over, no reason to go on! I literally became ill, and I assumed that my online career was over for good.
After calming down and putting away my rope and wobbly stool, I figured that this must be a mistake. I had used the term “Adult access” in describing an area of our premium membership forums and surely this must have tripped an automatic red-flag or something. I contacted PayPal customer-support by telephone and was told that I could send an appeal to “appeal@paypal.com”. I promptly wrote a lengthy explanation and fired it off to the ‘appeal@paypal.com’ address.
Now here is where I began to realize that PayPal is not the most professional outfit out there. 24 hours after I sent my appeal to appeal@paypal.com, it was returned as undeliverable - those fucks on the phone gave me a fake email address to send my appeal to! How’s that for professional customer service?! Now I went from being depressed to angry. I resent my email, this time to AUP@Paypal.com which was the address for questions that was on the first email I received.
*Update: I have since learned from a PayPal employee that the correct email for a PayPal appeal is appeals@paypal.com . I have not tested it, but I was assured that appeals@paypal.com (with an S at the end) is the correct email address.
Within hours of re-sending my appeal to AUP@paypal.com I received what appeared to be an automated response that basically echoed what the first email said: “you’re banned from PayPal and we are going to hold your balance ($5,100) for up to six months“. I then sat down and wrote yet another email, explaining that after being a long-time PayPal customer, paying thousands of dollars in fees over the years and being blown-off by the customer support people who gave me a fake email address that I at least deserved the professional courtesy of being given the assurance that my issue had been reviewed by a human being. I was confident that if someone actually reviewed the website, that there was no way they could come to the conclusion that we were selling subscription services to “certain sexually explicit material“.
Less than 12 hours after my “demand” for review I got my reply, from a human, assuring me that my case had been reviewed - and they would not be reversing their decision, and my $5,100 balance would be returned to me within 180 days.
Ok - so it’s PayPal’s game and they have decided to take their ball and go home. Time for me to move on and find someone else to give my transaction fees to.
Google Checkout can have my transaction fees from now on:
I had thought about using Google Checkout in the past because their transaction fees are much lower than PayPal (about 1/3 less) - but because GC does not support ongoing subscription payments I stuck with PayPal. Well now that PayPal has decided they no longer want my transaction fees I figured it was time to switch to Google Checkout. This would mean that I would have to change from a “subscription” based model to a one-time “lifetime” membership model. We’ve been offering lifetime memberships for $25 at the site for over a year, and we get a few each day, so the move to lifetime only memberships is not that big of a deal. And even though there are other providers that can do ongoing subscriptions, because there are no Drupal modules to support them, they aren’t a good choice for me.
The average lifespan of our premium subscriptions was 3-months. So earnings for the average subscription were $9.97 ($5.99 first month, $1.99 for each of the remaining months). We are now offering lifetime Premium Membership for $25, which is approx. 2.5x that value of an average premium subscriber. So even though I expect fewer lifetime signups because of the higher fee, that should be offset by the increased fee. To my surprise though, so far we have been getting the same number of higher-priced lifetime signups as we had been getting with the lower priced subscriptions, so earnings for the month so far are way above average. We are also offering a $10 discount to current subscribers who would otherwise loose access to our Premium Forums and so far there has been a very high purchase rate as their PayPal subscriptions run-out. So - even though PayPal has banned our account, being forced to move to one-time fees with Google Checkout may have been the best thing that has ever happened.
How to tell if PayPal is reviewing your account
A few days before PayPal banned my account, I received two emails that I had successfully confirmed my bank accounts - one email for each bank account I have setup in my PayPal profile. When I sent the email asking for PayPal to appeal my case (the one that did not get returned) I received two-more of those automated “your bank account has been confirmed emails”, and then, less than one-hour before I got my final response from PayPal, I got two more of the “your bank account has been confirmed” email messages. So it appears that each time PayPal looks at your account they also verify/validate your bank accounts, which triggers those emails.
And lastly: If you rely on PayPal make sure you read and understand PayPal’s user agreement and acceptable use policy. Even though they gouge you on fees, it can really ruin your day if they ban you. Although it has actually ended up increasing my earnings by being forced to move away from Paypal, waiting 180 days for my account balance is just no fun. I recommend not getting yourself banned in the first place.
Update: after posting my story i found this website, PayPalWarning.com
Where I learned a lot about how PayPal does business. If I had seen this website sooner I would have thought twice about letting them hold so much of my money. If you use or rely on PayPal I recommend that you check it out. Another very informative site is www.screw-Paypal.com
**Update#2: Paypal has released my balance to me!
***Update #3: Paypal has UNBanned my account!
Comments
33 Responses to “Banned From PayPal! (Permanently “Limited”)”
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Sorry to hear about that Randy. I went through the same crap with Paypal about three years ago. I sold a Les Paul guitar on eBay for $2300 and like an idiot, I let the money sit in my Paypal account when I went on vacation. Normally I would have transferred the money tomy bank account or used my Paypal debit card to withdraw the funds but go figure, the first time I left over $2K in my account , I got that dreaded notice you did.
Paypal are the biggest a-holes to deal with on the phone and you can forget about any appeal process because it’s non-existent. I had that Paypal for over 5 years and had done thousands of transaction totalling hundreds of thousands of dollars on eBay and I never had a single complaint.
Because I live in Florida in the winters, thank God Florida will allow you to file a small claims court case against a company like Paypal (who ironicly is only licensed in 18 states to be a money transmitter, but the feds seem to turn a blind eye to the fact Paypal is unlicensed). Anyway, it’s not like Paypal is going to send a representative to the court date in Florida and I won the judgement in less than 30 days and had my money returned promptly by Paypal. I also received a letter (a real snail mail letter !) stating Paypal was re-opening my account.
Nowadays, whenever I even get $20 in Paypal I run to the ATM and withdraw the funds.
You need to get this story viral to get the word out about Paypal’s borderline criminal activity.
Dave (The Other One) said:
Ohh Geeze - a quick Google Search on “paypal ripoff” or something similar and I think you’ll find that the word is already out about Paypal’s behavior. Unfortunately, i didnt do that google search until AFTER i was banned.
WOW! Thats bad… good luck with Google Checkout
Personally, I’d think twice about Google Checkout. It’s not well promoted by Google and not well used by the public. Also, they may have their own policy to contend with at some point.
I believe authorize.net (which is a payment gateway) may have an option for you. I’d suggest looking at them.
Thats bad..
I am with PayPal for last couple of years and though they are the best in business. Time to think differently.
I never had any problems with paypal… I can’t believe that they wouldn’t reverse their decision… thats awful.. maybe i should think about switching service before I get into a situation like that.
Same thing happened to me. I had over a thousand dollars that I had left in the account because of the money market interest rate. They held it for 6 months. At least I made some money on the interest. I was selling software and giving away the resale rights with it. They considered that an mlm. Our refund policy was very liberal. If a customer wanted a refund, he got it. I use 2checkout.com now. They are more expensive, but no problems. I may take a look at google checkout, as it’s now my policy to never put all my eggs in one basket.
Randy,
Either I missed something or you really don’t know why Paypal banned you. Do you really think it was that “Adult Access” phrase? That is pathetic and I think it’s illegal. Where’s the due process in all of this? If you applied for a credit card and were denied, you would at least be told why or could see your credit card. Digg pull this same BS. Just because one is associated with the Internt doesn’t mean that they are above the law.
I would not just quit and leave it be though. When the big guys do you dirty, it’s time to call in “your big guys” aka our Congressman. Tell your story to them and ask them for help. That’s why we put them in office. Anybody else out there who has a similar situation with Paypal or the Diggs of the world should raise hell too.
Here are the two links:
http://www.house.gov/house/MemberWWW_by_State.shtml
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Tom
That really is a horrendous way to treat someone. What gives PayPal the right to withold your funds - your legally acquired funds and their accrued interest - for a whole 6-months? I think I’d be speaking to a lawyer about this.
Thats really a sad & bad news. Its good that you know why you are banned….will make readers cautious.
Wow, this is crazy. If in fact a human had reviewed your case and found no offending evidence, why can’t they just revert your account? This situation blows for you, and likewise PayPal account holders.
I was a powerseller on ebay and had multiple issues with paypal. I have had several run ins with their customer service and was terribly displeased. It always sounded like some uneducated farmer who did nothing but get upset with me that i had a problem and wanted my money back. they kept saying that all of the information I wanted to know was classified and that they were handling the situation. my best recommendation to everyone is to use the old school method…..credit card processing. Its very simple to set up an account and im sure you will have much better success with the visa people as they are a much more reputable company. If you are doing enough business you will actually save a lot. Paypal fees are sky high. Good luck.
I had a similar experience. All I have to say is stay away from EVER using PayPal.
Even if you did get banned for a legitimate reason, why would they hold onto YOUR money for 6 months? Easy, to earn interest off it. PP has millions of users and I can just imagine at least a 1000 accounts rotating through the same thing — and that’s a lot of money.
PayPal is evil. Period.
Read article here and website here
Michael said:
I don’t know if Paypal is evil or if they are just plain stupid.. Anyone with even HALF a brain could look at my website and see that it does not violate their Acceptable Use Policy - even WITH the SLIGHTLY mature content that was in our forums area at that time, i still just cannot fathom anyone with a working brain-cell in their head deeming it as obscene or violating their terms..
Maybe you’re right and paypal isnt stupid - maybe this is just how they do business, but even then in the long run they would be loosing because now my thousands of dollars of transaction fees is going to another company..
paypal is stupid AND evil. Period.
Sorry to hear about your paypal problems.
Have you considered getting your own credit card merchant account? Make sure you get one that lets you accept recurring payments (subscriptions). Fees much lower than paypal too (like, 1.5% vs 2.99%).
I used PayPal for an EBay transaction when it was still Xcom. The seller misrepresented the item I bought. I complained to them, but because the seller did a bunch of business with them, they sided with him despite his ad clearly being false (EBay even banned him - this was before the EBay / PayPal relationship). As a result, I was out $500.
That being said, I have still masochistically used PayPal, but thank you for suggesting a good alternative. Is it good for buyers as well?
I got “banned” a few years ago. I had the day to spend with them so this is how I got my account unlocked and my money back the same day.
PayPal claimed that I had been associated with someone who was ripping people off but they wouldn’t say whom or what was the offending action. (Honestly, I knew this, not that I was complicit, but I did have a ne’er-do-well friend who I always suspected wasn’t doing things right on ebay - don’t we all have a jack-ass in our lives?)
Interestingly enough, they decided to lock the account the very same day that I sold a different friends Mac on Ebay. I had already shipped the item and had just gotten paid. Good move PayPal, $1200 for you right!? WRONG.
I called customer service, got the standard response… “We aren’t gonna say why, who, where what or anything at all, but we’ll keep your money for 6 months ok?”
Hell no, Not ok. I hung up feeling screwed, now I need to pay my friend the $1200 bucks for the laptop I just sold but how am I going to pull that out of my butt?
I called customer service back… And this method worked but it took about two hours, no joke. They kept giving me the standard “you are screwed” response to every question. I’d ask for my call to be escalated to the supervisor and beyond (never got past a second person) Then they would say is there anything else I can help you with? Then I’d just start all over from the beginning.
Meanwhile, I was surfing the net to understand their business model a little better and discovered this; Paypal isn’t a bank, They are not a credit card processor, in fact, they are handling large electronic transactions and operating outside of every single banking law there was! Ah Ha! This is my in…
I explained to the person that while I was talking to them, I was filing a complaint with the attorney general in my state and when I was finished with that, I’d be filing a complaint with the California attorney general (thats where they were located at the time - might still be) and that I understood that they were operating outside of all banking laws. I explained how I was certain that the attorney general would like to know that they could even be operating illegally in some states and perhaps even laundering money. Now, the whole time, the customer service person was saying, basically “go jump in a lake, its all in your T’s and C’s”. I finally gave up - literally about 2 - 2 1/2 hours in to the call. I hung up with the person and finished my online complaints.
No sooner had I pressed the submit button on the AZ AG’s form, I got an email from Paypal explaining that my funds had been released and they were sorry for any inconvenience. Sure enough, they were, I went and got the cash out of the atm with my paypal card, changed my account numbers in the paypal system (something made up if I remember right) and closed my account.
I think I got lucky, but you might try it. $1200 bucks was worth two hours of my time. Be polite to the people on the phone, don’t call them names, insinuate that they are stupid or anything else like that. Be professional and it might work for you. I discovered that they aren’t going to hang up on you if you aren’t an ass and it might result in you getting you money back.
Good luck!
I’m angry for you. Seriously, I’m pissed off.
I guess all I can do is swear here in public that I will never use PayPal to build an online business, something which I wouldn’t have thought twice about before. Do you hear me PayPal. YOU’LL NEVER GET MY BUSINESS!
Got to get this story circulating people. The only way these bastards can be fought is from the grass roots.
Lucas said:
Lucas, you rock!
Based on your comment, I sent an email to PayPal and they have agreed to return (most of) my balance!
thanks for the idea and the encouragement!
We lost a paypal account recently because there were 5 figures of fraudulent charge backs. The customer received what they ordered and then did a charge back 2 months later. Sure enough the Credit Card company sided with them and paypal said “sorry nothing we can do”.
I’m glad you got your money back.
As for google checkout - ive used htem for about 1 year now - no complaints - never an issue.
I’ve also heard similar stories with PayPal. Good to hear you got you money! How is Google Checkout working for you?
Yannis said:
GoogleCheckout is working GREAT! Google Checkout deposits my funds directly into my bank account every day - so no fear of them seizing my funds the way Paypal does to people every day.. and the fees are much lower than PayPal.. the only negative(s) are that GoogleCheckout does not support ongoing subscriptions (which is Ok for me) and currently there is no Drupal add-in to automatically process the transactions, but that’s no biggie so far either.
Randy, if you want, you can direct the people to other site for subscribing. I mean you can offer “Super Geek Offer” on one of your other site, use your wife’s paypal address and using redirection with some drupal db/IM Paypal hacking(if required), you can still use paypal.
You won’t be taking money on/for grownupgeek so technically it should be fine. I know many people who are using this technique. It may not be worthy for u but just thought of giving another option.
Pushkar
I had problems with Paypal. They closed my account when I started using them as a sole processor. I thankfully never got a charge back, however it didn’t seem to matter. Anyway I currently use Google Check out with no problems but have recently changed to linkpoint. Its much more professional and easy for customers to use.
Hope all works out for you.
Blessings
Megan
I bet consumerist.com would love to get a hold of this story.
[…] http://success.grownupgeek.com/index.php/2008/04/05/paypal-limited-access/ […]
i hate paypal they suck
Paypal has an option to transfer your funds at the end of each day. Use it. Then keep THAT account low by rolling it over into your real account frequently. I have a checking account that is only for Paypal to play in. Works for me.
After opening a account with Paypal and had to pay $5.00 (that is in our currency ZAR 4 cans of coke)they said I can only pay through them but not receive money. I di now have a moneybookers.com and alert pay account both will be able to transfer funds to me.
I have google account but they only pay out in the USA and UK.
Wynand
I’m part of your club for sure! (2,300on hold)two days ago they limited my account….reason being high risk need proof of shipment..ok i gave them all the information. I talk to at least twenty people getting the badge number even recording the conversation. I even got my buyers to write them. Still they say ” ok we need to review it and in 24 hours you will hear from us.” I would tell them im recording them. Then i would make them promise on tape. So tomorrow is the day. Which I have a feeling they won’t do shit. So I’m going to small claims court. Does anyone have any other ideas? I did that truste thing as well (in review) Court is the best I guess. On ebay it says you wait total of 21 days…something tells me i will get a letter saying wait 180 days lol… thats when i wont sleep take it to court and they pay for everything- doctor fees and all
So in the end my account was lifted everyone… But it took me at least 40 calls and a week. So don’t give up. Tips would be to keep asking for a manager. Warn them you are headed to file a complaint or to court. They would send me ridiculous emails saying they can’t lift it. so a week of hell… If I can do it anyone can.
These kind of stories about PayPal are all too frequent. Both Google Checkout and PayPal are third party providers and charge higher fees than going directly through a merchant services provider. If you are looking for e-commerce solutions and automatic recurring billing (Subscription Payments), check out my website (cardpaymentoptions.com) because that is exactly what I do. It’s a much better way of processing payments and a lot more cost effective. Make sure to watch the tutorial video by clicking the “Video” link on the page. Let me know if you have any questions.
My account didn’t get banned, but money sent to me recently (for a blog sale) is on hold, “pending a Paypal investigation”.
I’ve used Paypal for years, and as a freelancer, get paid through it every week. I didn’t know they could hold your money like this, truly scary.
Will also look into Google Checkout, and alternatives. Thanxs for sharing your story!