Consumer complaint received 2016-10-31
Product: Bank account or service — Other bank product/service
Issue: Making/receiving payments, sending money — 
Company: Paypal Holdings, Inc (VA)

On XXXX/XXXX/16 I used PayPal to reserve a hotel room through XXXX ( who claimed that payment was not required until the day of check-in - XXXX/XXXX/16 ). Within 5 minutes of booking, I realized the hotel was not going to work for my purposes, and cancelled the transaction through XXXX ( for which I received a cancellation notice ). In my PayPal activity, I could see both the pending charge and the pending credit ( which I assumed would cancel each other out that evening ). While the funds were immediately held in my linked checking account by PayPal, to my surprise that evening ( XXXX/XXXX/16 ) they debited my checking account for the $ XXXX room fee, but did not issue me the corresponding credit that they received from XXXX. 
When I realized this, I called PayPal on XXXX/XXXX/16, and was told that this is because it takes 3-5 business days for the payment to process through the ACH system. When I enquired why the funds were immediately taken from my account ( despite the representation by XXXX that I would not be charged until check-in ), the PayPal representative explained that they had to credit XXXX, so they paid them from their funds. Logically then, I asked why they were holding my refund monies, since when XXXX processed the refund on the same day ( within 10 minutes of the original transaction ), they must have received the funds that evening in the same way that they 'd taken them from me. The PayPal supervisor then tried to explain that they were entitled to hold my funds, as they were still waiting for the monies from my bank to come through the ACH systems ( which is complete nonsense ). He indicated that my funds would come back into my PayPal account ( not my checking account by Wednesday - XXXX/XXXX/16 ) and I would then have to request the transfer to my bank account which could take another 3-5 business days. Therefore the total time frame from beginning ( charge ) to end ( refund ), despite the fact that the XXXX transactions occurred within 10 min of each other, would be approximately 10-12 days ( depending if there were 2 weekends or not ). When I asked him where it was disclosed that PayPal was earning interest on my money, he first indicated that they were just a processing company and did n't actually have funds. However I reminded him that he told me originally that they ( PayPal ) had paid XXXX immediately ( despite according to XXXX they were not required to do so ), and they had to have " funds '' to be able to do that. He then walked this back and said it was in the companies disclosures. I have gone back through the PayPal disclosures and can find no evidence/admission that PayPal is earning interest on our funds by utilizing their bogus 3-5 business day window for ACH processing ( which is 1-3 days, depending on if it is a weekend ). Not only is PayPal not disclosing this fact properly, but they violated what XXXX advertised by debiting my account immediately, AND are not applying the same principals to me ( the consumer ) that they are applying to XXXX ( the merchant ) ( by giving them immediate credit, but not doing the same for me ).