This is not surprising to me at all, nor do I see anything nefarious in this. PayPal operates two different business units, a payments processing business and a

This is not surprising to me at all, nor do I see anything nefarious in this. PayPal operates two different business units, a payments processing business and a commercial loan business. Both operate on separate P&L's, and with different risk requirements. Let's consider two different situations: 1. PayPal's payments processing group worries about the risk of your account, and thinks about applying a hold on your funds. Just before doing so, they call the loans group, who says that they'd be perfectly happy to give you a loan for the amount of the hold, you're good for it. So, Paypal as a whole decides not to place a hold. 2. Paypal's payment processing department worries about the risk of your account, so they place a hold on your deposits. In parallel, the loan department decides you're a good credit risk, and so you apply for and receive a loan for the same amount as the hold. In case 1, if those payments do indeed get charged back, Paypal is forced to try to come after you for the balance. Unfortunately, this debt won't have very strong legal standing, because it's not backed by a loan agreement. They might or might not get their money back. It also puts them in the position of having to chase you for the money. In case 2, if the payments get charged back, Paypal is sitting on the funds already, and can just claim them. This might cause you to default on the loan, but that's your problem now, not PayPal's. They are also making interest on the amount of the loan. It's pretty clear that Case 2 is MUCH better for PayPal, and only marginally worse for you, assuming that you are right about the payments all being good -- you are only out the interest cost on the money. What you seem to be arguing is that PayPal should be "nice" to you and go with Case 1. The other fact that you might be missing is that nearly all traditional payment processors would require some kind of reserve account in situations like this, and even if they weren't holding the money, they require that they have withdrawal privileges on the account into which the funds deposit so that they can claw back money if needed. PayPal is by no means unusual or abusive in holding funds, it just seems that way because they don't pitch this as part of their up-front marketing.