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.
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.