PayPal horror story and why I no longer use them.

I’m just another person Paypal screwed over. I saw your link “share your story” so here I am. This happened years ago. I started off selling on ebay and eventually created a website and used paypals backend merchant account (the API where i could have my own checkout system) and the money still goes into my paypal account. It became my main business account and I bought things from it, paid vendors, received payments, etc. A full fledged business account.

Out of the blue, with NO warning, I logged into my account one day and saw they held $30,000. Yes, I was dumb and kept over $30k in the account. Again, it was my business account I used to run a business.

I finally got a hold of a “risk manager” and she explained that they are holding this money for 6 months and ALSO taking 20% off every payment that comes in to put in a reserve account. The money is held until no activity occurs for 6 months. In other words, if 5 months goes by with no activity and someone sends me $1 then the clock starts over and 6 more months needs to go by for me to get the $30,000 back.

I explained to her I can’t run my business with them holding 20% and I have a lot of bills to pay with this $30k they are holding. She didn’t care. What happened is they got a few complaints, impatient customers wanting their product and so on. It’s a custom made product by the way, takes time. Everything was shipped within 10 days, sometimes just 2 days. Some people are just impatient and nasty human beings!

Keep in mind, I had a solid record with them for a long time, years. I had a lot of money going thru their system. I was a good customer! So that day I stopped using them totally, almost lost my business. It was actually one of the worst times of my life because I thought this is the start of me losing everything I’ve worked so hard for. How am I going to pay my bills!

Once I snapped out of the anxiety I applied for REAL merchant accounts. 3 of them to be exact. Got approved for all 3 and stopped using paypal. Waited the 6 months and called them the day after 6 months and said GIVE ME MY MONEY! They did.

Funny thing is they felt i was a risk so they held the money just in case chargebacks came rolling in they could cover them. Not sure how $30k was calculated. But after 6 months, NOT 1 CHARGEBACK CAME IN. They held it all for nothing. Paypal is the worst company I’ve ever dealt with. My other merchant accounts have worked out fine and been in business ever since.

My advice is to stay away from paypal. But also don’t ever rely on just one bank, vendor, merchant, etc for everything. That’s why I opened 3 merchant accounts. One of them gives me problems I switch without missing 1 single day of business. I don’t like banks in general because they are similar to paypal in a lot of ways but no way near as bad as paypal.

Nobody cares more about your money than you so protect it!

Posted: May 12, 2015 at 4:41 pm


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5 Responses to PayPal horror story and why I no longer use them.

  1. Peter K says:

    Thank you for sharing your story. We are in the midst of dealing with Paypal for money they took out of our account. What 3 merchants did you sign up with? Do you have contact info you can send me? Thank you and all the best.

  2. unsatisfied says:

    Pay pal debit my checking account for a payment without my authorization. On April 30,2015 I purchased a subscription from Microsoft (Xbox Gold Live) for one month using my Xbox 360 gaming system. The total cost for this subscription was $10.79 for which I authorized payment for threw Pay pal using a debit/credit card (my preferred payment method). However, despite the fact that this was the only way in which I authorized payment for my subscription to Microsoft on my pay pal account. Pay pal instead completed this transaction with out my authorization using a checking/bank account that I have on file with them. When I called pay pals customer support line and spoke with a representative about what had happen. Instead of correcting the problem the representative told me that it is pay pals policy to charge a customers bank account first regardless of what payment method the customer authorizes for payment as long as it is on file with their company. I then proceed to explain to the representative that this policy that she was telling me about is not listed or shown on their company’s website where I can make changes to my account payment preferences. And in fact the statement listed on that webpage where a customer (customers Wallet) can make changes to their payment preferences states that “If there is a problem with your preferred payment method, we’ll (pay pal) use one of your other linked payment methods as a backup.” Again the representative stated that because of there policy they are within their rights to bill their customers using their desired payment preferences rather than their customers even without approval because the customer has in on file/linked with pay pal. The result of pay pal not honoring the payment agreement or option that I chose for payment for my subscription to Microsoft has cause several checks within my account to bounce causing me not only for not having the funds in my checking account to pay for transaction that I made along with insufficient fees. All of this would not have happen had pay pal charged the debit/credit card that I had authorized for payment instead of billing me how they wanted to. I have made three attempts to correct this problem with pay pal all in which they are not willing to admit that they made an error and help to resolve the issues. A representative from PayPal executive office said that a purchase with a Xbox is not made online. So I guess its magic huh……

  3. ADuncan says:

    omg, my friend is going thru the same thing right now!!!! I own a boutique as well and have left PAYPAL BECAUSE THEY LIMITED MY ACCOUNT. BUT MY FRIEND HAS 15000 AND PAYPAL IS GIVING HER THE RUN AROUND AND WILL NOT LET HER TOUCH THAT ACCOUNT!!!!! WHICH 3 MERCHANTS DID YOU USE? I AM USING STRIPE BUT I WANT ANOTHER TO PROTECT MY BUSINESS

  4. Anonymous says:

    Companies have become way too dependent on algorithms! Try advertising with Facebook or Google it the same type of situations. Account bans because the algorithm says to ban you. Those idiots need to get out of the theoretical and join the rest of us in the real world!

  5. Travis says:

    Companies rely way to heavy on algorithms these days. Trying to advertise with Google or Facebook is about the same with there algorithm based banning! The idiots need to get out of the theoretical and join the rest of us in the real world!

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