4 ms·

Paypal is a licensed money transmitter, and they are required to follow those rules. They can't just keep your money. The money can be frozen for up to 180 day

Paypal is a licensed money transmitter, and they are required to follow those rules. They can't just keep your money. The money can be frozen for up to 180 days.. which is exactly the same as every merchant account I've ever seen. If PayPal decides the money isn't yours, it goes back to who sent it. It doesn't become Paypals property.

JumpCrisscross 10y ago
PayPal wears many hats. During transit, you are correct. If you're holding funds "in reserve" or otherwise "on deposit" with them, however, the rules are more flexible. For example, if they aren't certain you comply with their internal AML policy, they may have the power to indefinitely hold your funds. If they aren't certain you comply with their internal antifraud policy, they may have the power to indefinitely hold your funds. They may also be able to assess various fees, charges, et cetera against your "balances", whether free or restricted. I say "may" because this varies jurisdiction to jurisdiction.
- rgbrenner 10y ago
  Paypals user agreement limits fund holds to 180 days. If they hold your funds after that, that's breach of contract. Time to contact state agencies and/or go to court.
  - JumpCrisscross 10y ago
    > Paypals user agreement limits fund holds to 180 days Search for the word "notwithstanding". It usually comes in the form "notwithstanding anything to the contrary in the rest of this agreement..." Remember that PayPal incorporates--and reserves the unilateral right to change--several policy documents into its agreements. These agreements are necessarily complicated. They're also drafted by counsel working for PayPal. At least in the case of AML, I'm reasonably certain PayPal has to, under federal law, hold funds when it suspects money laundering. Unlike banks, which have their AML policies and definitions reviewed, PayPal is relatively free in constructing this policy.
    - deleted 10y ago
      [deleted]
    - rgbrenner 10y ago
      Did you do your own search? Because "notwithstanding" only occurs twice in PayPal's agreements: one for the right to display your trademark; and another for arbitration. PayPal's agreement requires 30 days notice of any changes, and they post the changes on their website: https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-f... Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow. The funds frozen for AML don't become paypal's -- they're seized by the government.
      - JumpCrisscross 10y ago
        > Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow It is complicated. For example, New York's Department of Financial Services "interposed no objection to PayPal offering certain of its payment processing services to New York customers without being licensed as a money transmitter" in 2002 [1]. These rules are complex alone, complex in their interrelations and subject to competing regulatory interests. I work in a regulated financial forum. I've seen, or been relayed through regulators, accounts concerning money transmitters needing to hold funds for more than 180 days to finish an investigation per their internal policy. At that point, the contract doesn't matter--statute trumps. This might be unique to New York, but I doubt we're the only state or territory with these rules (usually, our laws are the most cutting). If it's customer versus compliance, the customer almost always has to engage regulators or sue to make progress. When using money transmitters like PayPal to not only move funds but also hold them you're giving up a lot of the regulatory protection and venue-provisioning you get with more sophisticated services. If a business relies on PayPal, its management needs to talk to a lawyer and do more research. [1] http://www.dfs.ny.gov/legal/interpret/lo020603.htm http://www.dfs.ny.gov/legal/interpret/lo020603.htm
        rgbrenner 10y ago
  - DrScump 10y ago
    Can you go directly to court, or is there an arbitration process in the way, first? What does the current TOS say?
  - otakucode 10y ago
    An End User License Agreement only holds when it is in the best interests of the company issuing it and never at any other time. I'm pretty sure that's in there somewhere. Looking at those jokes as an actual contract is laughable.
TheSpiceIsLife 10y ago
They can do whatever they want with your money while, as you mention down thread, you contact authorities or take them to court. They probably won't do anything particularly nefarious as far as the law is concerned, but that doesn't prevent this situation from becoming an unmitigated disaster for the small business owner who doesn't have their own floor of lawyers.
- rgbrenner 10y ago
  Nothing in his post suggests PayPal has violated their agreements. In fact, nothing here would be out of line for any merchant account (except maybe the customer service issues). 2% chargeback rate is extremely high. It would get you shutdown pretty much everywhere. MSP agreements usually say between 0.25% to 1% for the chargeback rate limit. This is 10x what i've seen some banks specify as an acceptable chargeback rate. And if you exceed it.. you get warnings, reserve lines and longer holding periods, and eventually the termination of your account. Exactly what happened to OP. Each one of those actions should have been a red flag to the merchant tellling them they have a serious problem they need to address.
  - sabslaurent 10y ago
    Sorry for the delayed reply, HN wasn't letting me comment. You don't seem to understand that Paypal agreed to my 2% chargeback rate, in fact they came up with the $5000 set reserve + 10% rolling reserve in order to let me run. Not once did Paypal tell me I'm at risk of losing my account or getting my funds frozen for 6 months. I have had 0 warnings. The issue here is bigger than that, it's the inconsistency in what they request, it's Paypal requesting information but not letting me provide it, it's Paypal's inner departments not speaking to each other and every time you call in you get different information. When I log into my account it still says it's limited because Paypal needs more information regarding recent sales, but guess what, they don't tell you which information they need or how to provide it. Paypal was aware of my high dispute rate and agreed to work with me based on the reserve they wanted which I accepted. Not once did I receive a warning contrarily to what you may think.
    - 10y ago

JumpCrisscross 10y ago

PayPal wears many hats. During transit, you are correct. If you're holding funds "in reserve" or otherwise "on deposit" with them, however, the rules are more flexible. For example, if they aren't certain you comply with their internal AML policy, they may have the power to indefinitely hold your funds. If they aren't certain you comply with their internal antifraud policy, they may have the power to indefinitely hold your funds. They may also be able to assess various fees, charges, et cetera against your "balances", whether free or restricted. I say "may" because this varies jurisdiction to jurisdiction.

rgbrenner 10y ago
Paypals user agreement limits fund holds to 180 days. If they hold your funds after that, that's breach of contract. Time to contact state agencies and/or go to court.
- JumpCrisscross 10y ago
  > Paypals user agreement limits fund holds to 180 days Search for the word "notwithstanding". It usually comes in the form "notwithstanding anything to the contrary in the rest of this agreement..." Remember that PayPal incorporates--and reserves the unilateral right to change--several policy documents into its agreements. These agreements are necessarily complicated. They're also drafted by counsel working for PayPal. At least in the case of AML, I'm reasonably certain PayPal has to, under federal law, hold funds when it suspects money laundering. Unlike banks, which have their AML policies and definitions reviewed, PayPal is relatively free in constructing this policy.
  - deleted 10y ago
    [deleted]
  - rgbrenner 10y ago
    Did you do your own search? Because "notwithstanding" only occurs twice in PayPal's agreements: one for the right to display your trademark; and another for arbitration. PayPal's agreement requires 30 days notice of any changes, and they post the changes on their website: https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-f... Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow. The funds frozen for AML don't become paypal's -- they're seized by the government.
    - JumpCrisscross 10y ago
      > Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow It is complicated. For example, New York's Department of Financial Services "interposed no objection to PayPal offering certain of its payment processing services to New York customers without being licensed as a money transmitter" in 2002 [1]. These rules are complex alone, complex in their interrelations and subject to competing regulatory interests. I work in a regulated financial forum. I've seen, or been relayed through regulators, accounts concerning money transmitters needing to hold funds for more than 180 days to finish an investigation per their internal policy. At that point, the contract doesn't matter--statute trumps. This might be unique to New York, but I doubt we're the only state or territory with these rules (usually, our laws are the most cutting). If it's customer versus compliance, the customer almost always has to engage regulators or sue to make progress. When using money transmitters like PayPal to not only move funds but also hold them you're giving up a lot of the regulatory protection and venue-provisioning you get with more sophisticated services. If a business relies on PayPal, its management needs to talk to a lawyer and do more research. [1] http://www.dfs.ny.gov/legal/interpret/lo020603.htm http://www.dfs.ny.gov/legal/interpret/lo020603.htm
      - rgbrenner 10y ago
- DrScump 10y ago
  Can you go directly to court, or is there an arbitration process in the way, first? What does the current TOS say?
- otakucode 10y ago
  An End User License Agreement only holds when it is in the best interests of the company issuing it and never at any other time. I'm pretty sure that's in there somewhere. Looking at those jokes as an actual contract is laughable.

TheSpiceIsLife 10y ago

They can do whatever they want with your money while, as you mention down thread, you contact authorities or take them to court. They probably won't do anything particularly nefarious as far as the law is concerned, but that doesn't prevent this situation from becoming an unmitigated disaster for the small business owner who doesn't have their own floor of lawyers.

rgbrenner 10y ago
Nothing in his post suggests PayPal has violated their agreements. In fact, nothing here would be out of line for any merchant account (except maybe the customer service issues). 2% chargeback rate is extremely high. It would get you shutdown pretty much everywhere. MSP agreements usually say between 0.25% to 1% for the chargeback rate limit. This is 10x what i've seen some banks specify as an acceptable chargeback rate. And if you exceed it.. you get warnings, reserve lines and longer holding periods, and eventually the termination of your account. Exactly what happened to OP. Each one of those actions should have been a red flag to the merchant tellling them they have a serious problem they need to address.
- sabslaurent 10y ago
  Sorry for the delayed reply, HN wasn't letting me comment. You don't seem to understand that Paypal agreed to my 2% chargeback rate, in fact they came up with the $5000 set reserve + 10% rolling reserve in order to let me run. Not once did Paypal tell me I'm at risk of losing my account or getting my funds frozen for 6 months. I have had 0 warnings. The issue here is bigger than that, it's the inconsistency in what they request, it's Paypal requesting information but not letting me provide it, it's Paypal's inner departments not speaking to each other and every time you call in you get different information. When I log into my account it still says it's limited because Paypal needs more information regarding recent sales, but guess what, they don't tell you which information they need or how to provide it. Paypal was aware of my high dispute rate and agreed to work with me based on the reserve they wanted which I accepted. Not once did I receive a warning contrarily to what you may think.
  - 10y ago