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Sat Apr 17 2010 15:00:24

PayPal Holds Seller Funds from Fulfilled Orders

By: Ina Steiner
Sponsored Link
To the Editor:
I am wondering how many other PayPal customers, beside myself, are irate & frustrated with their new Rule regarding "holding funds"?

I decided to open a second eBay account a couple of months ago, and went through all the required procedures to do so. I then find out after doing so, and selling pretty well, that the funds from my sales have been put on hold for various reasons, such as my length of time on eBay and PayPal, etc.

I have been an eBay Seller since 1998, and a PayPal customer since their inception. I am a PowerSeller, with only 2 Negatives in 12 months, and have high DSR ratings. This apparently has no value or meaning to PP. I have both called & written to them, with a copy of their informational quote (below), & have been told that this information does not affect the new account, even though I pointed out that I am one & the same person:

PayPal direct quote:

"If you meet the following, you'll receive payments instantly in most cases:

* You have been an eBay and PayPal member for #-months or more, AND
* Your total Feedback score is ### or greater, AND
* Your Buyer dissatisfaction percentage is less than #% AND
* You are selling in a category or industry with an established history."

Does this make any sense? Is this legal? how about giving the Seller a % on using their "held" money? etc., etc.! How outrageous this is!! they are holding payments for items I have mailed to my customers, and they have received, as shown by USPS Delivery Confirmation info. What can be done to remedy this appalling action?
Thanks Ina!




Comments (18) | Permalink
Readers Comments

PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Another Deb
       
Sat Apr 17 19:31:36 2010
"What can be done to remedy this appalling action"?

If you don't agree to any one of Paypal or ebay's policies, you may close your account.

Their way or the highway.

I've gone to www.ebid.net



PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Mike I.
       
Sat Apr 17 21:25:01 2010
As others have reported, many times, this is not something new for paypal.  Part of the problem is that paypal would have you believe that their terms trump those of the states they are licensed in, and that is just not true.

I don't know what state you are in, but there are regulations that apply to paypal.  In Florida they are licensed as a money transmitter.  Under Fl. law, they are REQUIRED to get you your money in no more than 10 days.  While this isn't great, it is certainly better than the 20 days that they usually impose on sellers.

If they don't send your money you can file against the bond that they are required to post.  Or in FL it looks like you can also get the Office of Financial Regulation to do it for you...although I wouldn't hold my breath waiting for that to happen.

If you want to know who to bitch at in your state it is available on the paypal site as follows:

Log in to your account and in the search box on the top right type in ''license'' w/o the quotes.  The first result should be ''about us-state licenses-paypal''. Click on this and it will bring up a list of states with the name of the regulatory office and a link to their license.

The license that comes up will probably be expired as apparently it's too much trouble for the kids at paypal to keep these things current.  You have to go to the state regulators office web site to see if it really is current.  In FL it shows that it expired but doing a search on the Financial Regulators web site shows that it is still current until the end of this month.  It would be nice to catch them operating with an expired license.

At any rate if paypal did this to me, I would complain loud and long to the State Financial Regulators office. However, since I gave up on ebay/paypal before they started this silliness, it will not be an issue for me...unless I should go soft in the head and decide to sell on ebay again.  I hope this helps and I wish you luck!!

Mike
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Jim This user has validated their user name.
       
Sat Apr 17 21:42:49 2010
When I open a second account it will have a couple hundred dollars in it from the get go figuring there will be holds but shipping needs to be paid.  

Also griping about interest on PP accounts is rather odd as all accounts are earning very low single digit numbers.  Looking at current rates on money market and savings, they are about 2-3%.

Which if you had a average hold of $1000, means you are forgoing a grand total of $20-30 a year of interest.  

PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Lisa
       
Sat Apr 17 21:58:36 2010
PayPal held $500 of my money for six months for an off eBay sale in which the buyer filed a dispute. Once PayPal realized it was an off eBay matter, the only issue was, did buyer receive the item.  When I confirmed buyer did receive item, PP closed dispute in my favor. The Buyer then turned around and filed a new dispute/claim saying that the buyer did not authorize the purchase of this item.  Nice try.  In the meantime, I had received an item back. I can't say it was the item I sent. It couldn't have been. The one I sent was new, the thing I got back was filthy, damaged and old.  I provided PP enough email exchanges to show that the buyer did authorize the purchase and after what seemed like eternity, PP closed the dispute in my favor.  I never heard from Buyer again, I guess since it's been about 2 years, I'll try to sell it after I get it fixed.  I did not get interest on that money though I feel I should have.
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: ebay nonsense
       
Sat Apr 17 23:36:15 2010
@ Jim

While $20-30 per year in interest to a seller might not seem like much, consider how many sellers have their funds held and what the total is and how much interest Paypal makes on those millions.

Quite a different picture eh?  

Whatever anyone does, don't use their Virtual Terminal. Those have huge rolling reserves and they grab and keep tens of thousands if leave that much in there.  Lots of horror stories on the net about those rolling reserves.
Some businesses were left with zero operating expenses and went under!!

Their illegal 21 day holds are nothing compared to those rolling reserves and some can be 30-40%!
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: whatever.
       
Sun Apr 18 00:55:36 2010
@Mike,

I couldn't get that information to come up by doing that search on Paypal.

According to screw-paypal.com Paypal doesn't have a money transmitter license in my state (Wisconsin) but I do remember finding and reading the law on this some months back and they do indeed need such a license and I believe the maximum they can delay transmittal of funds is either 5 or 7 days.

I guess my point and my question is: Paypal making it hard to find out salient information about them.
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: whatever.
       
Sun Apr 18 00:57:24 2010
Found it!  Thanks to teh google:

https://www.paypal.com/cgi-bin/webscr?cmd=p/ir/licenses
-outside
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Jim This user has validated their user name.
       
Sun Apr 18 11:43:56 2010
@ebay nonsense

Not much interest.  
http://consumerist.com/2008/02/what-can-you-do-if-paypal-hol
ds-your-funds-for-21-days-gamble-with-it-in-their-money-market-fund.html

''Although
PayPal earns interest on the money it holds, it's not very much when compared to the rest of the company's revenue streams. PayPal doesn't release data on how much it earns in interest, but outside analysts estimate it's less than $10 million per quarter—''a drop in the bucket'' compared to the $1.8 billion PayPal earned in 2007. ''

Interest rates are even less and profits on holds are much less.  

Held money will be put in PayPal's money market if the seller signs up for it.  So this line of complain seems to be not justified.

The idea of having to finance something sold plus shipping and other costs for 21 days while PayPal sorts things out has a bit of justification, but if you are using Paypal, your business plan should account for this.  

As to state licensing, what will likely happen is that the state will demand PayPal buy a license and they will.  No real effect.

PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Si Sancho
       
Sun Apr 18 19:51:59 2010
[RANT ON] PayPal / PayFlow are a huge pile of steaming dog doo! Do I sound upset yet? I tried for two months to complete a Payflow account so I could use my own merchant account to complete buyer transactions. PayFlow has done everything imaginable to make setting this up impossible! When I ask for their assistance I am met with nothing but, ''we're here to help!'', but NO help comes! Just tons of BS and run around. Phone numbers with 15 levels of menu selections. I kicked those jerk off's to the curb! I can find a MUCH less painful and time consuming method of self abuse! I've had an e-bay account since 1998, sold a few things a few years back but this was before the ''new rules'' & ''keep your money for ANY reason'' crap. I'm old school (68) this is NOT the way we're gonna do business. My account has always been 100% FB. [RANT OFF] -Si
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Neil
       
Mon Apr 19 09:14:10 2010
The second account has no relation to the first one. The length of time the first account is open and/or shares a common paypal account with the second account is irrelevant. Ebay looks at the second and only the second account and asks paypal to put a hold.

How difficult is it to understand this?
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Tired of eBay's Bullsh*t This user has validated their user name.
       
Mon Apr 19 11:26:40 2010
.
.
.
@ What can be done to remedy this appalling action?

1. Write your State Attorney General [long uphill battle to get these folks off the bench, but it'll likely happen someday -- even Big Tobacco got called on the carpet ... eventually]

2. File a lawsuit against Paypal to release your funds once you have tracking showing delivery [good luck with this ... but at least the legal wing at PP central will get a good chuckle. OTOH, if the NYT or WSJ decides to write about your lawsuit ... that might get PP's attention]

3. Get a merchant account [not a realistic option for many small sellers]

4. Require bank wire transfer for payment [not allowed on eBay, and wire transfer typically costs sender $25 and receiver $15, so mighty expensive. UNLESS you are selling an item over ~$2000, at which point it gets increasing cheaper than using PP. And it is one helluva lot safer for the seller]

... but the only real practical solution for most ...

5. Sell off eBay, that way you can require whatever payment method you like.

...

"Might makes right" as the saying goes, so expect eBay/Paypal to throw around their weight until a dozen State Attorneys General get the guts to take 'em on. And per Ina's recent post about Wall Street analysts saying eBay gonna lose traffic until, quote: "We believe that Buyers will continue to migrate away from eBay - taking Sellers along with them - until the overall convenience and trust & safety of the eBay marketplace has materially improved."

... well, we can expect more of this from eBay/Paypal ... and more exit of sellers who will take more buyers with them to other sites. eBay will need another year or two of buyer loss before the board of directors wakes up and fires JD.

- Tired of eBay's Bullsh*t
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: TATYANA
       
Mon Apr 19 23:59:29 2010
Interesting about the licensing: New York has a license requirement for money transmitters, or requires that there be a contract with a licensed money transmitter. PayPal shows no license in New York State. Hmmm....
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: shipping out
       
Tue Apr 20 03:18:48 2010
I sold on Ebay for about 8 years without a single dispute. I stopped selling when compulsory Paypal was forced on the UK and moved to Ebid. Sales are slow because I still refuse to accept Paypal though I do accept Google Checkout
If I started selling on Ebay again my money would be held even though I have an excellent track record with Ebay.
Now full buyer protection is about to to be extended to all transactions outside Ebay in the UK. Buyers are unlikely to pay any other way wherever you try to sell on line. Fraud will increase on those sites and potentially sellers on those sites will face same problems they left Ebay to get away from.
No doubt payments will be held too making Paypal richer and  end of day other sites poorer in more ways than one but there is no way Paypal are ever going to get chance to hold my money
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: no paypalorebayforme
       
Tue Apr 20 07:11:23 2010
I am in SC and do not see PP listed as being licensed here?
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Robert Cerveny, Jr.
       
Tue Apr 20 13:28:55 2010
I had the same problem. But getting tired of the same excuses got me out of paypal. I have a great community bank where I bank at. I opened a business checking accoung where there is no monthly fees. I found a credit card company that has all credit cards and costs $19.95 a month plus 2.5% of the card. I set this up on Ebay and my aoth auction sites as the credit card company keeps the money for me when I dropshipp order and what is left over goes directly to my bank account with no fees for the transference. I can also take checks at the time of checkout as the credit card company has its own software to check the buyers account and to put a hold on the amount needed. Not much business with checks, but it is an option I give the buyer at checkout where ebay will not let you do checks yourself.  Always think around or through the problem and take action. As someone said from florida here, dont sit and get sad or angry, there are legal alternatives. Paypal and ebay are always thinking slick to stick it topeople but there are always laws that sit them straight as people have said here. dont let them ruin your business or hurt you financially, protect yourself and go after them as the various govt agencies do. If they can go after them, you can do.
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
This user has validated their user name. by: Philip Cohen
       
Tue Apr 20 18:09:39 2010
What I find so hard to believe is that, in lieu of a “merchant card account”, all the banks, via their major credit card payments processing partners, have not yet introduced their own form of card/terminal-less payments processing system. It should be relatively simple for the banks to add such a feature to their internet banking interface(s). Why are they letting this unscrupulous duo eat into their payments processing, particularly when “all the banks” could do it so much better than the dysfunctional PayPal ever could. I don’t understand! Maybe there’s a “Peter Principle” running those organizations as well?

Donahoe/eBay/PayPal: Dead Men Walking

http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p
=6502877
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: Fruity This user has validated their user name.
       
Tue Apr 20 19:49:00 2010
The problem is you actually think Auctionbytes can help you. they can't and honestly I dont think they would other than publish it. You should file a complaint with your state stating they are running an illegal bank by which they are violating the exemption they were granted for FDIC protection by using the funds for their own use. That really will make them worried. Do you need a form letter?

No media outlet will help you. So you have to decide. Are you gonna sit there and write a letter to someone who is not in any position to help you, or are you gonna help yourself and use the federal law against them to get this rectified.


You and others are suffering and being exploited. You are being used. And yet you do not see that you hold the key and the power, that you can put them out on the streets if you really understood what you hold at your fingertips.

If you have been screwed then you need to come on to my radio show!
PayPal Holds Seller Funds from Fulfilled Orders   PayPal Holds Seller Funds from Fulfilled Orders
by: just me
       
Thu Apr 22 08:26:09 2010
This is from a poster at the ebay paypal forum.

It would appear that interst from held funds is a big money-maker for ebay-paypal.
According to financial reports, income from interest rose from $115.92 million in 2008 to $1.42 Billion in Q4 2009.

Shown the same on at least 2 charts:
http://video.mainstreet.com/quote/EBAY/details/income-state
ment.html

http://finance.comcast.net/stocks/income_statement.html?ID_OSI=92226

I'm
no financial expert by any means but those figures seem quite telling. I wonder what that metric for 2010 Q1 is?


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