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What happens if PayPal closes your account?

Answer

PayPal will hold your balance for 180 days if they close the account because you violated their terms of service. If there are any fines or liabilities associated with your account closure, PayPal will deduct those fees from your balance.

I’ve had no-one to turn to for help but found that PayPal is very inflexible and rigid in their practices. I have nothing against this company because they perform a necessary service and serve their clients well, however, if they decide to close your account without cause or warning then you are left with nothing.

My wife and I were working full time from home for a small company in the UK that had about 30 employees. These jobs were outsourced to me, my wife and another girl who worked remotely from India. We would telecommute every day for 8 hours helping various companies with their IT support issues, as well as fulfilling custom orders from eBay sellers around the world while running our own side business of selling vintage clothing on eBay. Our duties included maintaining websites, providing technical support via telephone or email, shipping products out to customers etc. This seemed like an ideal job for us because we are both hopelessly addicted to eBay! The money was good too – about £150 per week some weeks – so we quit our jobs, moved out of our flat and lived happily in the country.

Throughout all this we were earning an honest living through PayPal by accepting payments for services rendered from clients around the world – as well as testing various ideas and promotions using a real business account with real money that was made available to us – which included bank transfers, credit cards and Paypal balances from trading activity. We were also making extra cash selling vintage clothing on eBay and using PayPal’s “My Cash Card” service to receive payments into our UK bank account via cash top up terminals or via their ATM cards (a neat idea!). Everything seemed fine until one day when I logged into my personal PayPal account (the one linked to my new company) only to find my balance was frozen, with no reason given as to why.

I called their helpline and after holding for a long time I finally got through to someone in an outsourced call center (India? Pakistan?) who could barely speak English! The service was laughable and they told me that I had breached the terms & conditions of my account by transferring funds into certain countries but would not tell me which ones! So I asked what would happen if one of my customers tried to send money to Iran through PayPal – and he said it would be frozen too….! Now this is nonsense because there are customers using paypal all over the world every day, so why would PayPal randomly freeze someone’s account for sending funds to Iran or any other country? Needless to say I was livid!

So, for some reason they decided to close my account without warning – and left me with nothing. No money, no payouts from eBay sales or Paypal My Cash Card accounts (which had cash balances) – nothing! The only funds I could access were the PayPal balance on my credit card that is linked to my account which was £300 at the time….so how do you survive if you have bills to pay, rent to sort out, a mortgage etc? And what about all those people who rely on this service to receive payments into their bank accounts because many countries still don’t have a direct payment facility using credit cards? It’s ridiculous and it really shouldn’t be happening. If your business has accounts with PayPal then perhaps you should set up a direct deposit facility so that money is taken out of your bank account by PayPal and sent directly to your bank. That way you will always have access to any funds in your account – at least until they decide to close it down!

Anyway, I got really angry about this situation and started writing emails on forums while stressing out – which was not good for my heart…or my health or marriage! After fighting with them for 2 whole days over the phone and via email (during which time I received replies telling me there was nothing wrong with my account) I decided to call their corporate office in San Jose, California. They were incredibly helpful there but said they would pass the information along because it was up to the call center in India to sort this out. An hour or so later the Indian call center phoned up and said I was cleared to spend my funds again – although they were still refusing to tell me which country (or countries) had been listed as “restricted” by them! This is a ridiculous policy that cannot help but cause problems for honest people who may unknowingly have customers in banned countries or simply randomly freeze their account because of an internal glitch, so I am writing this e-mail hoping PayPal will change their policies.

Even so, they took away all my customer balances – allegedly due to fraud worries but without warning or any concrete evidence beyond an accusation from another customer based on circumstantial/unsubstantiated claims. It was a shock to suddenly lose all this money and it was only after the call center people in the US intervened that I finally got my balances back through sheer persistence. Some of these customer accounts were less than $100 but as I said above, there are many thousands of users out there who rely on PayPal for their living and cannot afford to suddenly be cut off without warning – especially when you consider how much it costs them to pay via credit card!

I am sure you don’t want your customers scammed or ripped off by criminals, so why not implement better fraud detection processes before closing down an account? Or perhaps get someone with a brain at the Indian call centers who can tell good businesses from bad ones?

I’m sure most people would be happy to give you a list of customers who have made small transactions, especially when the business is Amazon selling books and CDs where people pay for goods with Paypal.

The other problem I have with PayPal is the fact that there are scammers/criminals out there who use legitimate looking email addresses linked to legitimate looking businesses but which are in fact fronts for fraud. Just recently I received an email from “PayPal” requesting my personal details supposedly to confirm my account – complete with their real name and logo on it! Yet when I tried contacting them through either friends or colleagues (who knew me personally) they said that they had never heard of them….so how safe can these companies really be? This business was in the UK and had a real looking website – but I am sure there are many companies around the world using similar tactics. Remember, scammers will only get to you by emailing you out of the blue!

All you need to do is use your credit card or bank account to confirm who you are – so why on earth would they be asking me for my postal address, mobile number and date of birth? When I told them that giving them this information was against all online security policies they quickly moved onto asking me for other people’s details (both work colleagues and friends) claiming they needed their permission too. Needless to say, I refused to give these incriminating details because it wasn’t an official PayPal e-mail anyway – it had been spoofed!

I have heard of other cases where users have received similar dodgy e-mails from PayPal stating that you need to enter your postal address and phone number to finalize your account – don’t do this as they will not only try to scam you but you could also be handing them all the information they need to commit identity theft on someone else. For example, a criminal may get hold of one of these email addresses and then sell it on under their own name in order to steal people’s credit cards etc without being traced because it was never really “them” who requested the account closure in the first place.

As I said, criminals will use whatever means they can to get at your personal details so always be on your guard, especially with dodgy e-mails. I also find it incredible that since PayPal are now part of eBay (who have a huge customer database themselves) they are still asking for extra personal information when you only want to buy something online? Do they really need to know my date of birth or do they simply think because I am such a great customer for them on Ebay I should give even more to them – I don’t know but it seems suspicious at the very least.

Although some people feel these security policies are necessary and fair towards both merchant and customer alike, many others just cannot see why PayPal does not offer merchants an option “not to accept payments as PayPal from new customers who refuse/cannot confirm their identity”.

I would also like to know why they have such a policy, as it doesn’t make sense. If someone wants to pay me money from a bank account or credit card then surely that should be enough? I am not PayPal’s customer, the other person is. As far as I’m concerned there is no need for them to store my credit card details and neither do I want to give them! Why on earth should I trust my personal information with an online company who feel that using real names, addresses etc are necessary (as you can see this policy is so dangerous) when what we’re really doing here is protecting ourselves and making sure we only deal with legitimate businesses?

If PayPal really did charge all businesses the same fees then I would accept it as fair – but they don’t. In my experience, small businesses pay higher fees for using PayPal than larger companies do – and of course when it comes to payment protection (which is your money), you will never get that if you are a small business either.

PayPal has also been very slow at implementing credit card chargeback regulations which means many consumers have had their money stolen by dodgy or non-existent sellers who have taken payment before stopping all contact with them in order to get away with it scot free! For example, someone buys goods online thinking they are buying from a legitimate store based in the UK and therefore covered under European laws regarding consumer rights etc but actually this may not be the case.

What may appear to be a UK store selling goods from within the UK (regardless of what “sales spiel” they feed you) who accept payment via PayPal from a credit or debit card could in fact be based anywhere else in the world and not offer any rights at all if anything goes wrong. This is because it’s possible for anyone to set up an online trading account using their own name and bank details which can then be used by anyone else. The problem with this is that it looks completely legitimate even though you are actually buying from someone who lives thousands of miles away, has no track record at all and no legal obligations whatsoever towards you when things go wrong.

PayPal have admitted themselves that they can do nothing if you buy from a dodgy seller because they cannot obtain transaction information in certain countries. They recommend that you use your own credit card when buying online but that’s exactly what a lot of people don’t want to do – and this is because they also have no rights there either! PayPal cannot offer any help at all and neither will your own bank as they are not informed of the transaction details. That’s why it’s so important for me to make sure I only deal with genuine sellers who offer fair policies regarding payment protection, dispute resolution etc. This is how I protect myself (and my money) and no one else should be able to tell me otherwise, particularly an online company who have their own security problems which include hacking and data loss.

In one case (which I have filed a report about with the IC3), my bank say they cannot refund even though I have evidence because PayPal has decided that it was “not their problem” and, as such, how can anyone actually hold them to account if anything goes wrong? The fact is – you cannot! And this is why we should not be forced to use PayPal in order to conduct our own business online, especially when there are so many other payment options available today which operate on entirely different principles.

Anyway – all of the above is just an introduction into why I’m writing this guide but also to highlight some of the problems PayPal have caused for myself in particular over the years. Their security issues

What happens if PayPal closes your account?

PayPal will hold your balance for 180 days if they close the account because you violated their terms of service. If there are any fines or liabilities associated with your account closure, PayPal will deduct those fees from your balance.

What happens if your PayPal account is closed?

After you close a PayPal account, you will no longer be able to access your transactions and history. Unpaid requests are automatically canceled.

Can you reopen a closed PayPal account?

Once you close your PayPal account, it cannot be reopened. However, if you do decide to open a new account, it will not include any of your transaction history from the previous account.

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