Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sat Mar 10 2012 17:27:59

eBay Attempts to Explain PayPal Holds and Floats

By: David Steiner

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In a rare Saturday announcement, eBay VP of Merchant Development, Michael Jones, posted the company's response to some pervasive questions merchants have asked over the years relating to the holding of funds by PayPal. Jones' announcement references a post on PayPal's Blog by Ed Eger on February 28th of last year.

Eger is general manager of PayPal North America. In Eger's blog, he explains why certain merchants experience the holds, while other do not:

In order to maintain the strength of our business and keep our costs low, we’ve had to evolve some of the ways we manage merchant risk. This does not mean we have unilaterally tightened credit across our entire merchant base. Instead, we are selectively addressing a small fraction of the highest risk merchants in our portfolio—merchants who we believe may struggle to meet their commitments to their customers.

Some of the more interesting points of Jones' post are:

When sellers experience a hold, we want to help them get access to their money as quickly as possible. That’s why we ask sellers to ship their items quickly and provide tracking information. In the vast majority of these cases, when sellers follow these guidelines, their money is available within 3-6 days. Longer holds may apply if best practices aren’t followed or if there are other buyer claims that haven’t been resolved. Although most of our sellers deliver their items quickly, our policies are intended to make sure that this happens consistently, and that buyers receive what they paid for.

And concerning the belief that PayPal earns money on the interest "float:"

We’ve also heard some speculation that eBay and PayPal are requiring sellers to hold money in their accounts so that we can earn interest on the funds. This couldn’t be farther from the truth. PayPal has always stored balances (including held balances) in FDIC-insured bank accounts, which earn a modest interest rate. To eliminate any confusion with our customers over the intent of our policy, we have decided to move the equivalent amount of money of our total “held balances” to a non-interest bearing account.

The timing of eBay's announcement about seller holds comes one year after PayPal's blog post. Three months ago, we wrote about this issue - see our report here. Perhaps eBay's post is in response to regulators taking a closer look at PayPal's practices?

The full eBay announcement can be read here.




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Readers Comments

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Philip Cohen
Web Site

Sat Mar 10 17:33:24 2012

And, just for fun, a comment on “The New Way To Pay In-Store” with PreyPal

http://forums.auctionbytes.com/vbulletin/showthread.php
?t=24611

eBay
/ PayPal / Donahoe: Dead Men Walking

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Anonymous Annie

Sat Mar 10 17:43:15 2012

Ina asks rhetorically: ''Perhaps eBay's post is in response to regulators taking a closer look at PayPal's practices?''

I had not heard anything about regulators looking more closely at PP... and if it's true, the the eBay/PP's response would make absolute (and predictable) sense.

People always tidy-up the house whenever company is coming to visit over the holidays. ~ The everyday dust, yesterday's mail, and last week's newspaper stack never really bother you. You know it's there... you see it... you know you OUGHT to do something about it... but it's really not so bad and it's just easier to let-it-go for a little while longer.

But when you get that call that Aunt Clara and Uncle Arthur are flying-in for the holidays... all those ''little'' things seem HUGE! You don't want them to see how sloppy and untidy you are! So you make a MAD DASH to get it all cleaned, tidied, dusted, mopped, windexed, and polished.

It's human nature.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

by: pace306 This user has validated their user name.

Sat Mar 10 19:35:45 2012

Im amazed this article was printed here. Its so full of lies that I dare anyone to keep a straight face when they read it!

"In the vast majority of these cases, when sellers follow these guidelines, their money is available within 3-6 days"  Really? I use eBay shiiping, am a 13 yr seller, a top rated seller, a power seller, I ship with in 24hrs, yes my funds are still held for 60 days.

Paypal SAYS they have eliminated interested bearing accounts - can it be proven? And if they did eliminate those accounts in 2008 - can I have my interest from 1998-2008 PLEASE?

Paypal holds are simply insurance aginst thier own sellers.They want YOU to loose moeny, not them.

What ever this guy says - believe the opposite.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Ric

Sat Mar 10 20:14:47 2012

In the past eBay/PayPal has refused to address sellers concerns when they have been arbitrarily subjected to account holds, now suddenly a "rare Saturday announcement' comes out of the blue?

Not so fast.....

I am betting that the reason for the "rare Saturday announcement" from PayPal was hastily put together to head off criticism which will likely result from an article running in the NY times.

The article can be found here: http://www.nytimes.com/2012/03/11/your-money/ebay-policy-leaves-some-s
ellers-fuming.html

Had
the New York Times article not run, there is no doubt PayPal would have continued to maintain their silence when sellers questioned methods and motives behind sudden holds.

This is a model for sellers to follow going forward when eBay/PayPal are out of line... Contact a major media outlet, get a reporter involved and go as public as you can. This will wake the sleeping giant even on a Saturday.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Ming the Merciless

Sat Mar 10 22:02:48 2012

What an enormous, steaming pile of BafiaSpeak.

"Manage risk" actually means transferring as much risk, liability, and responsibility to the seller so that seller loses money rather than PreyPal.

It means constantly changing the UA to continue to narrow the circumstances in which PayPal loses money by actually having to provide even a microscopic amount of seller protection.

They've been incrementally peddling toward this level of non-service for years, and no amount of disingenuous spin alters the fact that the criminal ebafia/PreyPal syndicate habitually LIES to its customers, to its stockholders, and to the media. It's what they do best.

The goal? Zero liability while publically suggesting the "best seller protection ever" -- you know, like ebafia's "lowest fees ever."

And what kind of photo is this? This guy is supposed to be a professional not some cutesy sitcom sidekick.

Why is that ebafia executives mostly have California frat boy photos?

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Anonymous Annie

Sat Mar 10 23:08:16 2012

Ming asks: ''And what kind of photo is this? This guy is supposed to be a professional not some cutesy sitcom sidekick.''

I normally try to avoid attacking someone's appearance... but you know, I had the VERY SAME thought!! It's not that he's an unattractive young man... it's just that his professional headshot looks like something that he includes with his community theater audition resume.

Not very professional in this setting.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Ming the Merciless

Sun Mar 11 01:30:25 2012

Annie, as an obviously follicularly challenged avatar, I would think of attacking your purple hair.

My intent here wasn't to make fun of this whiz kid's appearance, but rather the style photo ebay often releases.

Frankly it looks like an accidental photo taken in one of those photo booths.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Ming the Merciless

Sun Mar 11 01:31:31 2012

Of course, that should have read that I would never think of attacking your fashionably purple hair.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Philip Cohen
Web Site

Sun Mar 11 05:53:00 2012

Looks a bit like Molly Sugden to me ...

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Nan
Web Site

Sun Mar 11 09:37:34 2012

Regarding this part:

". . . we have decided to move the equivalent amount of money of our total “held balances” to a non-interest bearing account."

specifically:  _the equivalent amount of money_

Why put the extra words in there if they just meant 'we moved the held-balances to a non interest bearing account' ?

Is 'equivalent amount' of money a legal term where it had to be carefully worded?  Or is it just a product of the ebay philosophy of 'use more words, it makes you sound smarter and you will confuse the issue'
??

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

by: Susan Averello This user has validated their user name.

Sun Mar 11 10:08:49 2012

some speculation that eBay and PayPal are requiring sellers to hold money in their accounts so that we can earn interest on the funds. ... held in FDIC-insured bank accounts, which earn a modest interest rate.

Make up your mind, you are either interest or you're not. You are, just say it without the BS

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

by: ebay refugee camp This user has validated their user name.

Sun Mar 11 10:16:41 2012

You are right on about the ebay/paypal crusade towards zero liability. We have John Donahoe's 100% buyer guarantee that is shoved in your face every time you sign into ebay. This 100% guarantee is paid to fraudulent buyers at ebay/paypal expense if the seller is right and has done nothing wrong, there lies the rub. Ebay/Paypal are making it difficult for sellers to prove they did nothing wrong and yes they immediately hold your money if a buyer files a claim without a investigation. I have had this happen to me several times over the years, it was a long difficult process to prove I was a innocent honest seller and did nothing wrong and that the buyer was a fraud. It is not automatic and even if they find in the my favor I have had to call back again and again. It is puzzling and troublesome to read that they now are admitting for sure that they were holding funds in a interest bearing account, sellers funds, not paypal's funds. They are going to stop doing that now????? WHY NOW???? You have class action lawsuits that they are most definitely going to lose in this round and CNN and The New York Times embarrassing  ebay/paypal executives. I have said all along that embarassment is all the bully JD will understand, and he is a bully, there is little doubt about that, bullies hate being embarrased and it is a well known tool to get them to stop their bullying. I believe that there is blood in the water and more criticism is going to come, JD has lost milliuons of dollars in fees that ebay could have reaped but he drove away honest sellers. All of the other venues that have started up and some of those are doing well, those used to be ebay sales, thousands of sellers have moved away, they started their own websites and our doing well. JD is counting on major retailers to make up ther slack but that has a big elephant sitting in the room. The sellers who were driven away from ebay are still out there with their low overhead and will still get the sales with low prices and great service. There are major players that are entering the online payments game and paypal will lose out slow but sure. Like I said I see blodd in the water, someone from ebay making a statement about the paypal holds and actually claiming their stopping the interest bearing account practices? I want proof of that, and I am definitely listening. Is this the beginning of a retreat by ebay/paypal? Yes it is, the sellers who were also buyers on ebay who have left is more than likely making a huge impact. I noticed a 40% drop in sales since the new sellers release was announced. I am enjoying a huge increase in my off ebay sales and yes I still sell there, I do see my future getting brighter and the day is going to come when ebay  is no longer my concern. Alot of sellers are ready to leave but cannot just yet.I have to admit I feel so bad for the honest  sellers that have been subjected to the paypal holds, I know for a fact that that is happening to honest sellers and should not be going on. So all of you  honest sellers this little tidbit of a press release from paypal might be a sign that the holds will be eliminated. Do not forget ebay sellers list a couple of items elsewhere evewry day, release yourself from the beast slowly and you too will get to do the dance when you get those off ebay sales, I have a picture of JD and I stick a pin in him every time I get a off ebay sale, it is truly rewarding. Remember though this is waht you get when you put stock brokers in charge of a major corporation, thery are only qualified to illegally manipulate the stock market, they certailnly are not qualified to  manage ebay or paypal. Oh by the the way JD bullied another exective out the door the vice president of seller experience has left, really did he actually do that job?

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Al G

Sun Mar 11 10:16:48 2012

In the "krud kutter" mode the statement should read:

1. Your funds are being held because we think you are scamming the buyer
2. The funds will be released most quickly if you provide us with proof that you delivered the goods
3. You will not receive interest on your held funds because we don't want to pay interest & did so by moving an equivalent amount of our funds into a non-interest bearing account - so there!

4. Oh, BTW - watch out for PayPal, this is only eBay talking.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Al G

Sun Mar 11 10:18:03 2012

Aargh!

Delete #4 - maybe.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Al G

Sun Mar 11 10:19:58 2012

Maybe a harsh profile with a ruler showing height in  background would be more appropriate.

Suitable for hanging in your local post office.......

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

by: 10 year seller This user has validated their user name.

Sun Mar 11 11:00:47 2012

I have had a major up-tick in off eBay sales!
I think it was a matter of reaching the tipping point.
Other sites are gaining word of  mouth momentum. Buyers are feeling more comfortable buying from smaller sites.
Its truly wonderful.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Pete

Sun Mar 11 11:45:40 2012

When did eBay hire Jerry Van Dyke?

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

by: Patricia This user has validated their user name.

Sun Mar 11 12:41:32 2012

A good con artist can always make up a good explanation for conning you.  Ebay/Paypal has become expert in this field.

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: TrentDep

Sun Mar 11 13:06:10 2012

RIC :

Thanks for posting a link to the article (  http://www.nytimes.com/2012/03/11/your-money/ebay-policy-leaves-
some-s
ellers-fuming.html
) - the ~ Rare ~ Saturday announcement makes much more sense now...

If you have not read it, please do so - and if you ( like me ) take offense at ( from author - towards the end ) : '' ...bully for Ebay '' then please - by all means - write him @ haggler@nytimes.com and let him know that - even if written tongue in cheek, ANY apparent support for Ebay / Paypal is unwarranted...

A couple of obvious points of contention :  

The 21 day hold is anything but - there are many variations, from '' Whenever we determine the validity of a claim '' to 60, 180 days...

This has been going on for far longer than '' Last Fall ''...

And perhaps the most telling : Clearly, the seller had attempted to contact / reason with Ebay / Paypal - yet, it took being contacted by the NY Times before Ebay/Paypal could be bothered with even looking into the matter, or - Gods Forbid, justifying what was obviously an unjustifiable stance.

“This was never intended to be a source of income for us,”

Yeah - OK - and we'll also pretend that it never occurred to anyone there that a 21 day hold on 1% of 25 million sellers' hard earned income amounts to...  About what Don The Ho's raise was...

''...we hope that moving as swiftly as possible once we learned of the error...''

I think he meant to say: '' Once you turned the heat up by contacting the press, and we *had* to actually listen and pretend that we gave a sh*t ''...

I really would have liked for this author to stay with this point in particular : ''... eBay’s filter looked past Mr. Ferrall’s perfect record as a seller and said, in effect: “You’ve taken a few months off and you’re now selling cheaper stuff. That’s fishy.”''...

Seriously?  Were I to stop selling 25 cent pot holders, and move on to big ticket ~ Gizmos ~, perhaps they should take notice - that would actually make sense...

Well - I think Ebay / Paypal has pretty much acknowledged that they illegally benefited from these holds being left in interest bearing accounts, as opposed to an escrow account ( I assume that is what was meant by ~ Non Interest Bearing Accounts ~ ) will a class action have to be filed to recover the monies due each seller, or will these clowns actually roll over and do the right thing?...

I encourage EVERYONE to contact the author - it would be a shame for him to let this go while Ebay / Paypal are - at least to a small degree - on the run...

Perminate Link for eBay Attempts to Explain PayPal Holds and Floats   eBay Attempts to Explain PayPal Holds and Floats

This user has validated their user name. by: Ric

Sun Mar 11 13:10:42 2012

The article by the Times comes while PayPal is trying to infect Brick and Mortar retailers with their mobile payment system.

It is vital for them to put as positive a spin on this ill timed negative publicity in order to put out a fire.  If retailers believe the public smells a stink where PayPal is concerned, it would cause many to avoid PayPal's mobile payment offering and go with a less hated name such as Visa.

Sellers impacted by PayPal's hold policy need to strike while the iron is hot and get their cases out in front of the biggest media they can get to.

A series of articles and news stories popping up all over the country on the heels of the NY Times article would be very damaging to Paypal's image and could cause many B & M retailers to avoid the controversy by turning PayPal's Mobile Payment platform down.

If every seller who has been wrongly impacted by PayPal's hold policy contacted the media, PayPal could stand to lose significant revenue. Retailers would no doubt prefer not to be associated with a company which is drawing alot of negative attention from the public and the press.

Sellers, this may be your best chance ever to give PayPal some of it's own medicine.

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