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Sun Jan 16 2022 19:46:08

Online Sellers File RICO Suit over PayPal Payment Holds

By: Ina Steiner

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Several online sellers filed a RICO lawsuit against PayPal claiming the payments firm illegally seized their funds. But reports about the withholding of funds (payment holds) are not new, nor are lawsuits - Fernando v. PayPal and Zepeda v. PayPal are two classics

While the lawsuit targeted PayPal, complaints from online sellers extend to other payment processors, including online marketplaces. We've received complaints about payment holds on Facebook Marketplace and Mercari in the past 4 weeks, and we've read complaints about eBay and Etsy's practices as well. 

Below are excerpts of some of the reports sellers have sent us. 

Facebook Marketplace seller, January 11, 2022:

"I am not sure if you are aware of the frustrating problems Facebook Marketplace has with getting paid. Facebook groups are flooded with sellers having stalled payments. I am also a victim. I have only three orders from the first week in December but some sellers have thousands of dollars,...It is also theft."

Mercari seller, 12/18/2021

"Look at Mercari right now. My account was practically banned for no reason but to re verify my identity. Mercari stole and blocked my funds for all sales. I am far from alone. Several people are posting on Mercari's Facebook and other forums that their accounts in good standing are randomly banned and funds from completed sales taken."

Mercari seller, 12/22/2021

"I want to bring a major issue to your attention dealing with the marketplace Mercari. I recently listed a (recacted), which they deleted my account for. I have $(redacted) in my account which is my money that they are preventing me from transferring out of my account, now these are completed sales, monies out of escrow, monies Mercari has no right or jurisdiction over. 

"This lead me to start digging in, it seems they are doing this to 1000's of sellers, stealing possibly millions of dollars, in many cases for no reason at all."

Those are recent complaints, but it's a problem sellers have faced for decades. In a 2011 article about payment holds in EcommerceBytes, Kenneth Corbin wrote, "What many sellers may not know is that they can seek redress from state regulators if they feel the holds are unfair." But regulators need to hear from sellers - and it's not clear what any of them are prepared to do.

ArsTechnica has a good description of last week's lawsuit filed against PayPal, and it includes a link to the filing where you can read about the sellers and their stories.

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Readers Comments

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

This user has validated their user name. by: Ina

Sun Jan 16 20:19:57 2022

This is one problem the plaintiffs allege:

(PayPal) "...even telling Plaintiffs and members of the class that they will "have to get a subpoena" to learn the simple information as to why PayPal was holding, and denying Plaintiffs, access to their own money..."

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: pace306 This user has validated their user name.

Sun Jan 16 20:48:45 2022

Palpal (specifically - when they were part of the evil San Jose empire) already lost this case ... but you can bet all the money in Devin Wenigs golden parachute that the TOS was "corrected" after the suit (I never checked since I want part of it).

I'm sure that it now contains verbiage about giving themselves permission to hold funds if they believe that certain things are happening - to protect themselves and "their buyers".

They will list (possible) fraud, theft, non traceable packages (aka to "prove" shipment), non agreement to entering in w-9 data and a host more.

Of course NONE of these people (and I DID have high hopes for Mercari - but my hopes were dashed - their customer service in some cases is worse then eBays)(if thats even possible) are honest.

They dont care about you the seller - you are a useful tool for them to take advantage of and make money off - you the seller are not a partner - you are PREY.

Paypal lost before and they could easily loose again - the only question is why isnt eBay part of that suit ???????

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: Chicago48 This user has validated their user name.

Mon Jan 17 05:26:06 2022

Speaking of Mercari, they are running non-stop ads over the internet and TV.  I wonder how they can afford it?  I'm doing OK on Merc, have no complaints.  As for their customer service, it's strictly by email or messaging.  And I've complained that they need a chat room.  OR, at the least twitter account.  I twitter Ebay support all the time and get things resolved very fast.  Ditto Thredup.  So Merc needs a twitter account.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

This user has validated their user name. by: The End

Mon Jan 17 08:17:28 2022

Very nice.
Drive PayPal out of business.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: 1 Angry Artist This user has validated their user name.

Mon Jan 17 09:12:35 2022

There are many other reasons why Etsy, Ebay, Paypal, et al should be sued for RICO violations besides the payment holds.

They are all acting together with the Feds in a massive conspiracy against internet sellers.  There is also a political aspect to this as well.  The big 3 Sellers have been scanning sellers off site for their political actions and sellers are being shadow banned, their listings not being shown.

It's almost impossible to prove, yet I have spoken with and heard about many sellers who are sure they are being affected.

Don't forget that Paypal, Venmo, even major credit cards have de-platformed people like Mike Lindell (My Pillow Guy) because of his political activities.

These platforms are working hand in glove with the Gubmint- it's a big club and we ain't in it.    H/T   George Carlin.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: eBaySince2006 This user has validated their user name.

Mon Jan 17 10:46:15 2022

Holds are necessary sometimes but make these companies pay interest on our holds! Then they will think twice  

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: MIscetal This user has validated their user name.

Mon Jan 17 11:02:52 2022

The people who own eBay and PayPal are hardly anti-Mike Lindell conspirators. Look at who they donate money to and who they support politically.

The explanation is simple capitalism: While they hold our money, they profit on it - especially at the end of the tax year and end of their fiscal years.

Mike Lindell was de-platformed for posting false information and fomenting insurrection against the United States. The platforms would respond similarly to the Black Panthers and the Weather Underground - for similar reasons.

PayPal and eBay and the other selling platforms are making money - they love it when we blame everyone and everything but their greed.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: Ophelia1 This user has validated their user name.

Mon Jan 17 12:16:16 2022

My question is, to those that have had several thousands of dollars withheld by PayPal....why on earth do you leave so much money in your PayPal account?
Transfer daily if you have to, even if it is just $5.00. There is no sense at all to leave  funds in your PayPal account

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: pace306 This user has validated their user name.

Mon Jan 17 12:33:37 2022

Money holds “can” be legitimate and can be “allowed “ IF these companies provide crystal clear info on why and for how long

Most times the statements are overly broad and untrue

That, mixed with C- rated customer service- makes things worse and not better.

Problem is - these companies don’t care. There’s no reason to tell “the noise” anything- but since they have to - they do as little as possible to get by.

It’s not about contacting them via FB or via email etc - it’s about respect for other peoples money - like you want them to respect you - and they don’t.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: billly This user has validated their user name.

Mon Jan 17 14:21:10 2022

What is up with all of these platforms refusing to disclose the reason for witholding funds? A subpeona to find out why they are holding your money hostage? They all need to crash and burn.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: Snapped This user has validated their user name.

Mon Jan 17 14:28:53 2022

It really boils down to the same thing it does for every time a ‘client’ is sanctioned for an allegation of contract malfeasance - lack of due process.  And oversight for same.

There are plenty of laws chiseled to constrain both banks and money processors, but they differ in what is ‘allowable’ regarding delays in funds availability.  Much of the complaints arise when an entity ‘registered’ as one ‘behaves’ like the other, then ‘justifies’ it by leaning on some kind of ‘security’ related reason (said the Swiss-cheesed cyber shielded). This is further ‘legitimized’ by a ‘compulsory’ TOS constructed broadly enough to ‘permit’ this behavior without recourse - itself a still to be settled contract ‘legality’.  

One can only hope for some accountability, and a reckoning, and that the plaintiffs don’t settle.  Meanwhile, the existing ‘defense’ remains - don’t like it?  Then don’t let the door hit ya where the Lord split ya on your way out.  And we’re keeping your hat to cover any back charges pending.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: 1 Angry Artist This user has validated their user name.

Mon Jan 17 16:09:45 2022

Miscetal- you are woefully misinformed when it comes to national politics as is evidenced by your post.

 Furthermore, you seem to imply that it's fine for these big companies to de-platform, de-bank and put out of business those people whose politics you disagree with.  And while we're at it, let's keep up the censorship on FB, YT, Twitter, etc.

Wait till they come for you- then see how you feel.  

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: billly This user has validated their user name.

Mon Jan 17 18:24:51 2022

@1 Angry Artist   "National Politics" aren't the reason people like PillUh Guy have been deplatformed. No platform is obligated to enable the spreading of lies and misinformation as a means of facilitating a grift. George Carlin wouldn't appreciate co-opting his message and conflating it with ignorant Q conspiracies.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

This user has validated their user name. by: Lightning

Mon Jan 17 18:36:46 2022

@Ophelia1
''why on earth do you leave so much money in your PayPal account?''

You are missing the obvious.  The money never LANDS in the PayPal account to be swept.  The sale is made, money paid to PayPal by the buyer, but put on HOLD by PayPal, never getting officially into the Sellers' accounts.  Over and over.   If is was so simple as just transferring out the money, don't you think they would have thought to do that?

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: pace306 This user has validated their user name.

Tue Jan 18 09:28:17 2022

PayPal, after it’s failed acquisition of Pinterest needs money - have you people no feelings for the poor people working there??? (insert obvious sarcasm!)

“ The company's stock took a particularly big hit in October when Bloomberg reported that PayPal (NASDAQ:PYPL) was in talks to buy Pinterest (NYSE:PINS) in a deal valuing Pinterest at $45B. The payment company's stock dropped almost 12% in three sessions. PayPal later said it wouldn't pursue the acquisition, but the stock continued to decline for the rest of the year.”

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: DingDong This user has validated their user name.

Tue Jan 18 13:30:37 2022

I do think that Paypal, eBay, Etsy and Amazon (and any other in-house payment sites) that hold onto the sellers monies, should be paying interest on that held money.  There needs to be governing rules on held money, and the reason that it's being held.

Perminate Link for Online Sellers File RICO Suit over PayPal Payment Holds   Online Sellers File RICO Suit over PayPal Payment Holds

by: eBaySince2006 This user has validated their user name.

Wed Jan 19 14:49:21 2022

And just like that PayPal decided to release my $5700. They held it for no reason other than me being forced to switch to eBay Managed Payments which caused an overnight drop in payment flow. The representative even told me to "deal with it and blame eBay " when I called. I already got paid from the Zepeda vs PayPal lawsuit in 2017 for holding my money back then. Maybe I'll get paid again! Thanks class action lawsuit!



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