I think the point of confusion revolves around the definition of a (real) "business". If someone accepts paypal payments for a garage sale or transient lemonad

I think the point of confusion revolves around the definition of a (real) "business". If someone accepts paypal payments for a garage sale or transient lemonade stand, is that a real business? People accept cash and checks for many things that might be considered commercial, and banks don't have a problem with low volumes of commercial-transaction-related deposits being made to personal accounts. It's primarily the account owner's responsibility to pay taxes and do any other necessary reporting. I believe banks do primary reporting for money laundering and terrorism purposes and back-up reporting for tax purposes, but none of that generally involves freezing accounts. People expect paypal to work like an easier means of check or cash payment, and when it turns out it doesn't work like that and the account gets frozen, people are understandably pissed off. The commercial/private transaction distinction is fairly arbitrary to begin with.