Product: Money transfer, virtual currency, or money service

I have had a PayPal account since the time of its inception. At the time its main function was to allow individuals to shop online without having to disclose their credit card information to every vendor. That is how I used the service and is the only way I ever intended to use the service. I have never sold one thing using PayPal. Recently, at the beginning of XXXXXXXX XXXX  I was helping a colleague sub-let his boat slip.. I gave the sub-lessor my name and address to send me a check for {$2800.00} to pass on to my colleague. I soon after spoke to the sub-lessor and he told me that, totally unbeknownst to me, much to my surprise a nd without asking my permission he had sent the money to me via PayPal. According to him, my PayPal account came up when he was putting my email address into his contacts. I dusted off my PayPal account and found that they had impounded the money and made it subject to a hold due to the fact that I do not have my social security number on file with PayPal, having never been asked. During the course of hours on the phone with their customer " service '' department it was made quite clear that they steadfastly refused to cancel the mistaken transaction and they also refused to release the money to me unless I acquiesced to their demand for my social security number, something I absolutely will not do. At first they stated that they had absolutely no choice but to handle things in this manner due to the new law regarding 1099 's. They later relented and admitted that their behavior was a matter of policy and was not, in fact, dictated by the new law. At this point i have the money on a tax ID hold until sometime in XXXX I think. The reason for the inordinately long hold time is, as explained by their employee XXXX, not to enjoy a really long float on my money but to magnanimously offer me plenty of time to think about why I should let them strongarm me into unwillingly providing them with vital personal information. At the expiration of this " thinking '' hold they will generously release XXXX  % of the funds. The other XXXX  % will be submitted to the IRS as backup withholding. XXXX was unclear as to how they would properly submit these funds to the IRS absent my social security # .I guess it will be up to me to track the money down. 
In addition to the aforementioned " thinking '' hold I was made subject to a " New Seller 's Hold '', now expired, for becoming a seller I never asked to become. 
I believe their behavior constitutes an unfair and deceptive trade practice. Although they had ample time to ask me if I wanted to be subject to the unfair and consumer-adverse rules they are trying to implement, they never did. Had I been given the opportunity and allowed to make an informed decision I may very well have been willing to give them my social security #. Then again I may not have. They chose not to ask deciding instead to try to force this issue after the fact. It is my belief that they did so out of a fear of losing business. Having my money and their reliance on the new law, however inaccurate, provides a good amount of leverage. 
I believe that they are perpetrating an unfair and deceptive trade practice based on the following : 1. They had plenty of time to ask me if I wanted this arrangement 2. They never gave me an opportunity to opt out of this essentially commercial arrangement 3. They have chosen to offer no flexibility, blaming their practice on the law when it is, in fact, their policy 4. They have no right to force me to disclose my SS #.