Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon May 7 2012 15:06:19

eBay Expands PayPal Holds Policy

By: Ina Steiner

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eBay sellers received an email over the course of the last several days informing them that eBay is expanding its PayPal holds policy (which it calls the Funds Availability program) to include "sellers who sell an item that has a sales price that is significantly higher than the average sales price of items previously sold by that seller."

PayPal's holds policy was investigated by the New York Times "Haggler" column on behalf of a seller, and eBay Vice President Christopher Payne told The Haggler that it would "tinker with its filter so that people like Mr. Ferrall wouldn't be flagged in the future. We're constantly refining these models, and we're going to learn from this experience."

eBay has also been sued over its PayPal holds policy and the parties have tentatively agreed to settle - plaintiffs are working up final settlement papers - see today's Newsflash article for details.

It will be interesting to see if plaintiffs were able to get PayPal to change its policy, but given eBay's letter to sellers this week, it seems unlikely they won many - if any - concessions.

Sellers detest the holds, since it puts severe cash flow pressure on their businesses - they must still pay shipping costs and other bills, but during the holds, their money is tied up in PayPal's coffers. While commonly referred to as "21-day holds," some sellers have reported holds as long as 6 months.

What's also interesting is eBay's claims about the flexibility sellers have in the payment methods they can accept. In its response to a motion in Dunkel v. eBay, a lawsuit filed against eBay in March, eBay writes about the plaintiffs claims, "Contrary to the Dunkel Plaintiffs' assertion, eBay's Accepted Payments Policy expressly provides that PayPal is only one of several different payment options for eBay sellers."

And eBay backs up that statement in a footnote that reads as follows:

"General payment options include ProPay, Skrill, Paymate, credit card or debit card, payment upon pickup and Bill Me Later. For many categories of sales, eBay will also accept wire transfers and bank cash transfers, checks, money orders and various on-line payment services. See Accepted Payments Policy, available at http://pages.ebay.com/help/policies/accepted-payments-policy.html."

So in the filing with the court, eBay said it accepts checks and wire transfers for "many" categories, but on the page it references, it states that for "most" categories, sellers can't ask buyers to send checks or wire transfers.

eBay is also making changes to its Buyer Protection Policy that has been greeted with concern from sellers. It began notifying buyers in April, and is notifying sellers in the same email that inform them of the expansion of its holds policy that's going out this week. Heraldo Botelho, Manager for eBay's Buyer Protection Policy, clarified the controversial partial refunds provision in this April 10th webcast of eBay Radio (Show 462 - Segment 5).

Here's the fulltext of the email eBay is sending sellers.

Updates to the eBay Buyer Protection Policy and Funds Availability Program

Dear Seller,

We're writing to let you know about updates to the eBay Buyer Protection Policy and the Funds Availability program.

The updated eBay Buyer Protection Policy goes into effect on June 19, 2012:

- A provision has been added stipulating that in some cases we may refund part of the cost of an item to the buyer, and receive reimbursement from the seller, to cover differences between the item described and the item actually received, such as items received with small parts missing or minor repairs needed. Buyers may be asked to provide written proof from an authorized third party detailing the cost of such repairs. In these cases, we will not require the buyer to return the item to the seller.

- A clarification has been included that delivery signature confirmation for items $250 or more is only required in order to protect sellers from losing a case where such service is offered by at least one shipping company. Similarly, when we ask a buyer to return a $250 or more item to the seller, delivery signature confirmation is required if it is offered by at least one shipping company.

- A clarification has been made that items purchased from the Businesses & Websites for Sale category will not be covered by eBay Buyer Protection.

- A provision has been added regarding the relationship between eBay Buyer Protection and the new managed return process. If a buyer uses the process to return an item purchased from an eligible transaction under that process, and the seller fails to provide a timely refund in accordance with the new process, the buyer may file a case under eBay Buyer Protection. If we resolve the case in the buyer's favor, we'll refund the buyer, the amount of which will depend on the terms and conditions of the process.

- As with earlier updates, other changes have been made to keep the eBay Buyer Protection Policy up-to-date with our product and service offerings

The update to the Funds Availability program goes into effect 30 days after delivery of this notice to you:

To better protect our consumers, eBay has at times requested, and may continue to request, that PayPal hold seller funds based on certain factors, including but not limited to, selling history, seller performance, riskiness of listing category, or the filing of an eBay Buyer Protection case. Currently, access to funds from buyer payments may be delayed to promote successful fulfillment for sellers who are new to selling on eBay or have a below standard seller rating. This program may be expanded to include:

- Sellers who sell an item in a high-risk category with no recent experience selling in that category; sell an item that has a sales price that is significantly higher than the average sales price of items previously sold by that seller; add a new PayPal account to their eBay account; were reinstated following an account restriction or suspension; or have recent account activity indicating risk, including but not limited to significant changes in listing activity or buyer dissatisfaction.

- Transactions where the buyer indicates a problem, including but not limited to messages or activity indicating that the item hasn't been received or that the item isn't as described in the listing.

Thanks,
Heraldo Botelho and Pawan Modani




Comments (25) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: Ed Gadfly

Mon May 7 15:14:01 2012

Is there any regulation to make sure that PayPal actually HAS all the money they are supposed to be holding?

The money is not FDIC protected, is it?

Is the money held by PayPal protected at all?

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: memker This user has validated their user name.

Mon May 7 15:32:59 2012

@ Ed Gadfly
https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/UserAgreement/gen
eral/FDIC

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: Ed Gadfly

Mon May 7 16:05:18 2012

Thank you, memker.

From the PayPal website:

''FDIC pass-through deposit insurance protects you only against the failure of the bank at which PayPal places your funds, and does NOT protect you against PayPal's insolvency. Through the terms of our User Agreement, we believe that your funds will also be protected from any claims of PayPal's creditors and will be returned to you even in the unlikely event of a PayPal insolvency.''

''... we believe...''

It's YOUR money. Do YOU believe?

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: pace306 This user has validated their user name.

Mon May 7 16:41:39 2012

Which eBay is telling the truth?

This one above?

--- or ----

This one?

''In a rare Saturday Announcement Board post, eBay Vice President of Merchant Development Michael Jones reacted to the New York Times column, writing in part, ''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.''

typical eBay behavior!

I had a 60 day hold on my account that was released when I threatened them with a lawsuit! It seems hardball is all eBay and Paypal understand!

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

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

Mon May 7 17:19:45 2012

What a racket! And to think... some people often wonder why so many sellers do NOT accept PP at their own websites or other venues.

Too risky for me!

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: Roger Rabbit

Mon May 7 17:56:38 2012

""General payment options include ProPay, Skrill, Paymate,..."
AKA The Three Dwarfs.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: TrentDep

Mon May 7 18:45:36 2012

~ eBay has at times requested, and may continue to request, that PayPal hold seller funds based on certain factors, including but not limited to ...~  

Pretty much anything they think that they can get away with...

As expansive as this is getting, one would think that they've been getting stuck with a bunch of claims that they were unable to recover from sellers... I think we know that to not be the case.

So...  What's the deal?   It would be hard for them to put this money in interest bearing accounts. since they recently stated they would not ... So - what is really going on?...

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

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

Mon May 7 19:35:00 2012

TrentDep concludes: ''Pretty much anything they think that they can get away with...''

I agree! It takes a great deal of talent to come up with things that are so vaguely written that it opens the door to allowing them to do pretty much anything they please.

In fact, the last one struck me as being particularly ''open-ended'' and subject to interpretation.

QUOTE: ''Transactions where the buyer indicates a problem, including but not limited to messages or activity indicating that the item hasn't been received or that the item isn't as described in the listing.''

I take that to mean if, during the course of a year, more than one impatient customer writes to say ''I ordered this on Friday night, and now it's MONDAY already... where is my item?'' ---- Then, we sellers of ordinary low-value non-electronic/non-precious items in low-risk categories will also be subject to holds.

PP frightens me. I really have no idea how they are able to get away with all the spit they DO get away with.

No wonder it's the ''most loved'' way for shoplifters, thieves and scammers to ''pay''.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: Dazzle This user has validated their user name.

Tue May 8 03:33:02 2012

Well this "hold" business has not actually happened to me - yet - but I am apathetic to those ebay/paypal is screwing with.

first time it does happen to me - I will cancell the transaction - send the potential buyer a copy of paypal's bs email and refund the buyer their payment. I will already have their email address and simply re-direct them to my website where the product in question will be more affordable and paypal will not be an accepted form of payment on my website any longer.

Not real sure where ebay thinks this little game is going but it sure as hell won't turn out to be in their favor in the long run.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: Bloggo This user has validated their user name.

Tue May 8 06:18:25 2012

JOKE OF THE DAY:
''To better protect our consumers,...''

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: Spartacus

Tue May 8 10:18:17 2012

I only accept Paypal on eBay because I'm forced to and I only sell things on eBay I can afford to lose.

On my website, which accounts for 75% of my business, I would never dream of accepting Paypal.

I also spread the word to other local business people who are moving online to steer clear of Paypal.

Ironic, at my local Chamber of Commerce and Business Guild meetings, you'd be amazed to hear how many businesses are leery of Paypal and eBay or have had negative experiences with them.

Good luck with their mobile payment solutions, most experienced merchants want nothing to do with them.

I guess nobody taught the geniuses at eBay/Paypal that ''word of mouth'' is your best advertising or the stake through your heart.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

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

Tue May 8 10:44:33 2012

Spartacus observes: ''...most experienced merchants want nothing to do with them.''

Precisely! Whenever the PayPal logo is present on a website, it absolutely SCREAMS ''I'm an inexperienced novice. This is all I can afford and I really don't know any better.''

Aside from all the other hazards that have developed over the years and in recent months... the main reason that I originally dropped PP from my website was because it made me look like an unprofessional amateur.

Now, I'll admit that when I first started, I actually WAS an amateur... and I really DIDN'T know better. And in fairness to the small home-based businesses and shoestring start-ups... I'm sure the great majority of them are honest and competent.

Nevertheless, why would ANY home-base or start-up business want to do ANYTHING that would make them look less professional and less competent than they aspire to be?

For those who want to start an online business, and who want to get the ball rolling with some cash flow (without making a commitment) PP can get your business engine jump-started.

But anyone who's SERIOUS about their business... and who hopes to attract (and keep) customers, PP is not the way to go... and in the long run, it will hold back the business and keep it from meeting its full potential.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: Steevo This user has validated their user name.

Tue May 8 12:39:01 2012

The paypal holds that were sued over, mostly in 2010 were *not* what we are talking about now.  

In those cases there were generally allegations of fraud, there was an actual reason for the holds in those class action lawsuits.  I don't know whether it was a good reason or not.

That is completely different from the holds that Ebay and PayPal just instituted.  

Now, there is absolutely no allegation of fraud, no reason to believe that were PayPal to not hold your money you would not be inclined to ship as you always have.

Their insinuation is if they were not to do this they would not be assured you would properly operate your business.

The current new policy is only to manipulate the sellers to do what they want.  

They have now stepped over the line into illegal territory because of the money involved.    

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: unusual1 This user has validated their user name.
Web Site

Tue May 8 23:19:43 2012


XXXXXXXXXXXXXXXXXXXXXXX porcelain coasters. The set is hand painted, made in Italy. Design is 1965.
NO PAYPAL !!

This is what is on the auction now on ebay. I DO NOT and WILL NOT accept paypal ever!!

Paypal is NOT required - taking credit cards as first payment option is.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

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

Tue May 8 23:34:50 2012

This sounds to me like eBay is trying to force sellers and buyers to NOT communicate at all. I know they were trying to do that with their previous  updates, but apparently that's not working. So now to keep sellers from talking to buyers, they are going to hold the seller's money. If I actually sold on eBay, this would definitely keep me from saying a word to any buyer!

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: blaumann This user has validated their user name.

Wed May 9 00:58:45 2012

If I sell an item for higher than my usual price range PAYPAL will hold my funds!
INSANE

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

This user has validated their user name. by: mcfiver

Wed May 9 05:48:30 2012

It is mind boggling to me that any financial institution could ever march in and freeze my account. This should be the final step in a long process that is done in tandem with the seller, and only during the course of a thorough and extensive investigation. Of course, we sellers are so damn independent, they know we'll never band together to fight this obscene policy.  

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: KEEPING A CLOSE EYE ON THEM ALL! This user has validated their user name.
Web Site

Wed May 9 07:46:17 2012

Don't know if this will work for 'everyone' or not but it did for us...

We own some 14 different web sales domains/sites - Last fall, (against our better judgment) we went ahead and put PP as a payment option on them along with our own payment systems (Amazon Checkout, Google, our own CC processors, etc...)

Sure as heck PP sent a letter telling us they 'might' place holds on funds (bear in mind these are NON ebay sites)

We shot a letter back telling them the very 1st time they did we'd remove PP as a payment option on every single last site we own and they could go straight to hell for all we cared.

They did in fact place holds on the 1st +/- 20 sales over the 1st  24 hour period we had them as an option and we did EXACTLY as we said we would, we IMMEDITELY removed PP as a payment option off every one of the sites and then proceeded to send PP a letter telling them we weren't playing these stupid games of theirs and that just as we had promised we would do we had removed them as an option off of every single site.

Also sent them a list of the sites to show we weren’t bluffing and that we couldn't care less if their crappy service was on our sites as a payment option or not.

With in 4 days low and behold they sent another letter telling us ALL holds had been removed from every last PP account we had set up to handle the sites.

I know this doesn't help the ebay people much but if you have private sites/domains /sales venues just go on the OFFENSE with them and tell them to go straight to hell…
Then remove them as a payment option IMMEDIATELY after they screw around with your money and apparently they back down pretty fast rather than lose the revenue you/your sites would provide them.

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

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

Wed May 9 09:47:42 2012

Why does anyone in their right mind still sell on ebay? I still take PP as it is the only payment form I can take in my UK and AU ecrater stores, but as of now with over 10 years selling PP has never messed with me. The day they do will also be the end of our using them. Currently now there are so many different options for selling venues, especially having your own website, I say again why are people still selling on ebay? One mass exodus on one day by the 'little, noisy sellers' would squash ebay flat and there is no way they could put a good spin on that in their next report to shareholders!

Perminate Link for eBay Expands PayPal Holds Policy   eBay Expands PayPal Holds Policy

by: zvicki This user has validated their user name.

Wed May 9 12:43:10 2012

Just a question here: I recently got the ''square'' form of payment for my iphone.
I got it for use at estate sales. However this got me thinking. Merchants on ebay are still ''allowed'' to accept credit card payments directly from buyers right?
If so, I wonder if we can just skip paypal all together and use square or any other single merchant type payment?
What do you think folks??

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