Boycott eBay and PayPal

[gentlegiant]

Be very careful in any dealings with PayPal and their parent eBay, especially if you are a merchant. My wife had been using PayPal for several years for merchant processing for her website and on March 25th they decided to lock her account With No Notice. She called in to find out why and it seems that they ahve decided they did not like her website content. When she initially began using Paypal she called the company and spoke to several people about her site and made sure it was OK for her to use PayPal. It now appears that after eBay purchased PayPal they decided to change some rules and policies and to NOT notify anyone of this except in the deep reaches of the PayPal website.

My wife is not the only one to feel this either. There are thousands who have been hit the exact same way. PayPal says that they will release the money in 180 days, but their record on doing this is dismal and most people never see theri money again without legal help.

PayPal is also under investigation by the FTC and several states for their busines and banking practices. The fact that they change policies without notifying anyone, do not offer typical credit card protections and the history of seizing money are all factors in this. There are also several pending class action suits against both eBay (PayPal's parent company) and PayPal.

My wife called PayPal and they told her that if she removed every mention of PayPal from her site that they would allow her to pull out the money and transfer it to a new account. The site was scrubbed Thursday. PayPal would not answer my wife's calls yesterday. We are not talking just a few dollars here either, more like at least 3 zeros before the decimal point. My wife is in her home town dealing with a family medical problem and this was the money she was living off of and using to help her family. PayPal does not care.

I had to cancel a dive trip so I could stay home and try to get a new merchant processor set up on her site to try and get the revenue stream flowing again before the bills are due. I am sure the ScubaBoard owners can attest to how expensive hosting gets when you have a busy site. My wife also runs a message board and she has over 50,000 members with an average of 350 members online at any time. This also means that around $1K of programming to integrate PayPal payments into the site is down the tubes as well.

My advice to anyone using PayPal as a merchant processor is to:
A. Don't leave any excess money in your account.
B. Read all the fine print on their website carefully or have an attorney look at it.
C. Look for another merchant service.
D. Read this website http://www.paypalsucks.com for more information

Sorry for the long rant, but I don't want anyone else getting hurt like we have been. We are talking to a couple of lawyers and they are looking at possible legal actions. PayPal seems to be settling quickly because they do not want publicity.

Hope everyone dives safe.

 

[Scubaroo]

The Paypalsucks website is full of similar stories about arbitrarily frozen assets - I would have though after the change of ownership that the questionable business practices would have ceased. Luckily I don't have to use them here in Australia anymore.

 

[salimbag]

Could you please recommend an alternative merchant service? How do they work?
And, if you don't mind, what was the content that Paypal found offensive.

 

[ScubaJeep]

I work in the Banking industry, and can say for sure that banks do not seize money. Only the government can do that. Under certain circumstances banks can freeze accounts, but they still remain the property of the account holder. You will want to contact an attorney. It sucks that it has come to this.

 

[ScubaJeep]

Then again,... Pay Pal isn't a Bank, is it?

 

[jonnythan]

FWIW, I've gotten many notices over the last few years from Paypal when they've changed their policies. I remember one in particular when they changed the user agreement quite a bit after eBay purchased them.

 

[IndigoBlue]

It used to be, that paying by cash, and getting a signed receipt was considered the only assured way to guarantee your transactions.

Then personal checking came onto the scene, back in the 1950s, and that was considered by many to be too risky for daily transactions. After all, there were bounced check problems and forged check problems occurring as often as not.

Then is was, that personal checking became fairly secure, with all the bugs and kinks worked out, and considered fairly assured, especially for tax purposes, where a cancelled check gave you proof of payment for IRS purposes.

Then credit cards came along, and that was considered to be unsure and risky, for a whole new host of reasons, like losing your credit cards, or merchants processing excess amounts, or overextending your credit ability (a problem that is still with us but viewed as easily fix-able by a bankruptcy declaration or loan reconstruction).

Then telephone payments came along, and that was considered to be unsure and risky, for all of the same reasons that previously in-person credit card use, and personal checks before that were viewed, such as mistakes or corruption. The credit card companies themselves have remedied that with their customer-recourse policies.

Now we are in a world of on-line payments. I am not sure I like this new world, and based on what my more-innovative friends have told me, I definitely do not trust this new world of on-line payments.

Therefore I will stick to telephone payments with my credit card.

There is a line drawn for everything, and crossing that line can be financially hazardous. Or maybe we just have not worked out all the bugs and kinks yet?

 

[gentlegiant]

My wife runs a discussion board for adult entertainment topics. I will not give any more info than that. I will say that there are no picture galleries on the site.

We have several lawyers who are board members and a few of them are already looking into this issue. There is even consideration of a class action by some of the members. I checked out the paypalsucks site and we are looking into some options mentioned there. Apparently Paypal is already under investigation by the FTC for their practices and just paid out over $150K in a New York settlement. There is also rumor of several states about to jump in as well.

Since eBay bought them the customer service has turned from bad to horrid. My wife did receive several email notices of changes, but Paypal always has said that any important official notices from them would come by mail and there was no mailed notice. According the previously mentioned site accounts get frozen and after 180 days or longer about 60% get their money back, the rest are still waiting.

I wonder if there is any correlation between frozen accounts and eBay profit/loss ratio?

 

[gentlegiant]

Just a quick update. My wife called an attorney who was recommended by a business associate of hers. After she contacted the attorney she called paypal in 1 last chance for them to correct the situation, they brushed her off as per the Paypal operating manual. I think the attorney Fed-Ex'd the letter yesterday and this evening they released the funds. We are still messed up on account processing, but that is getting worked out. We are currently using Verotel for merchant processing, but after all of our incorporation paperwork goes through we will look into other solutions.

The key if this ever happens to you is to tell them what you are going to do and follow it up. When lawyers come knocking and they think someone will fight them it seems that they cave. just imagine how it would look for the execs to get drug into depositions and court on a matter like this and you better believe we would have made it as public as possible. In another Internet forum an ex-PP employee did confirm that the money they freeze is used as revenue by the company (I hope the FTC and SEC find that post and interview the guy). This is real scary. After all of the mess with Enron, Tyco and others one would think that accounting practices would be getting a good going over and a thourough cleanup (an ultrasonic cleaning followed by tumble might be in order).