Consumer complaint received 2022-05-15
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Confusing or missing disclosures — 
Company: Paypal Holdings, Inc (TX)

On XX/XX/XXXX, my PayPal accounts were permanently limited with the statement that " we found potential risk associated with it. '' This frustratingly vague statement has led to a year and a half of aggravation with PayPal and I think the story should be made public so that PayPal can be held to account for their various misbehaviors in this matter in some form or another. 

I initially embarked on the complaints process with PayPal having virtually no visibility into why I was even banned in the first place ( mistakenly believing it was an issue with my Venmo account ). It required an arbitration proceeding with PayPal to discover any of the facts surrounding my dismissal from the platform, and I believe that those facts are important to the public discourse and why I'm including them here. 

In the process of that arbitration, PayPal ( by virtue of a sworn declaration ) stated that I was banned on XX/XX/XXXX for " two transactions that occurred in XXXX of XXXX. '' They stated that these transactions violated their " Acceptable Use Policy '' which states ( in part ) as follows : " [ A user ] may not use the PayPal service for activities that ... violate any law, statute, ordinance or regulation [ or ] relate to transactions involving ( a ) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, ( b ) drug paraphernalia, ( c ) cigarettes, ( d ) items that encourage, promote, facilitate or instruct others to engage in illegal activity, ( e ) stolen goods including digital and virtual goods, ( f ) the promotion of hate, XXXX, XXXX or other forms of intolerance that is discriminatory or the financial exploitation of a crime, ( g ) items that are considered obscene, ( h ) items that infringe or violate any copyright, trademark, right of publicity or privacy or any other proprietary right under the laws of any jurisdiction, ( i ) certain XXXX oriented materials or services, ( j ) ammunition, firearms, or certain firearm parts or accessories, or ( k ) certain weapons or knives regulated under applicable law. '' I was, at the time, engaged in a relationship with a woman in the XXXX and I can only guess that they allege this violated either the " items that are considered obscene '' or " certain XXXX oriented materials or services '' aspects, but those items are themselves very broad and very vague so that no user can reasonably note the scope of those terms at the time of agreement without some guidance being provided by PayPal themselves ; it doesn't matter, as the arbitrator dismissed the case without having PayPal divulge anything more that " two transactions in XXXX of XXXX. '' In any event, the fact that users have to play guessing games after the fact to understand what PayPal considers to be a violation of their Acceptable Use Policy is, at the very best, a massive failure on the part of PayPal to properly communicate the scope of their own rules so that customers understand what they are agreeing to. For example, " the promotion of hate, XXXX, XXXX or other forms of intolerance '' has been used to ban public figures like XXXX XXXX from their platform for conduct that, in its most favorable light to PayPal, took place off of their platform. This kind of conduct, especially given PayPal 's size in the market place, is predatory and the fact that they can make these determinations at their sole discretion without having to account for those decisions in any manner at all makes it even more so. 

In my case, they attempted to scare the arbitrator off the question of the underlying merits by arguing that the Bank Secrecy Act barred their revealing the reasons ( and were successful in doing so ), but the Bank Secrecy Act only bars PayPal from revealing whether a suspicious activity report was filed ( or providing information that reveals whether one was or wasn't filed ). They have perverted the scope of that act to serve as a giant shield behind which they can act in any predatory manner they see fit, and again, because their terms are so vague that consumers do not appreciate the one-sidedness of the agreement they're making at the time they open their PayPal account XXXX this behavior makes PayPal 's contract all the more unconscionable to consumers. 

This delay in action ( from XXXX of XXXX to XXXX of XXXX ) is especially troubling because the account, by PayPal 's own User Agreement, should have been flagged as a dormant account and closed. As stated in the User Agreement, " [ i ] f you do not log in to your PayPal account for two or more years, PayPal may close your PayPal account and send any funds in the PayPal account, including any balance in a linked Cash Account to your primary address ... '' The account had been dormant with a {$0.00} balance for 934 days at the time of the limitation, well in excess of the twXXXX year threshold for dormancy. I also had another older account that, at the time of the limitation, had been dormant for over 7 years and again, they failed to close the account as dormant. They stated in the arbitration that the dormancy of the account had nothing to do with the limitation, but it also begs the question of why the accounts were allowed to stay open given their dormant status, and why a dormant account was used as the basis for a permanent limitation. They have refused to answer that complaint, but again this highlights the predatory nature of their services. 

In addressing the delay, PayPal argued to the arbitrator that " any length of time is of no import '' but that statement violates public policy. The User Agreement is governed by Delaware law, and under Delaware common law, contract parties may not agree to circumvent any statute that is made in the public interests, such as a statute of limitations. They argued ( and the arbitrator agreed ) that their contract allows them to do so, which means that at least under one arbitrator 's view, PayPal 's contract as written allows them unlimited time to identify and act on alleged breaches of the contract. This is in clear violation of Delaware public policy and again, consumers do not understand when they enter into agreement with PayPal that they are effectively signing away their rights to even something as basic as a statute of limitations. 

Also in addressing the delay, PayPal argued in the arbitration that the XXXX of XXXX transactions " over time revealed themselves to be specific acceptable use policy violations '' but again that statement makes absolutely no sense, for several reasons. First, they state that they perform routine security scans to ensure compliance with the User Agreement. That account was dormant, so they had the complete set of transactions for over two and a half years and presumably performed their routine security scans over that time, and determined the use was acceptable use at the time. Second, as stated the account was itself dormant and should have been closed according to PayPal 's own contract, so why were they seeking to investigate a dormant account that should have been closed in the first place? Third, given that the account I had currently been using was not engaged in any such transactions, given the extreme length of time involved, and given that PayPal routinely allows other users to provide additional information to " mitigate the risk '' they find, the fact that I wasn't ever allowed to do so makes their determination seem arbitrary and inconsistent with the treatment other users receive. 

Which leads me to the final matter. I could simply walk away from PayPal, and would love to do so, but here 's the best bit : when they permanently limit your account, they will no longer allow you to close that account. The account that was dormant for over 7 years and wasn't closed now can not be closed. The account that was dormant for around XXXX and a half years and wasn't closed now can not be closed. The account that I requested PayPal close on XX/XX/XXXX in a phone call that they failed to close also now can not be closed. So a user that gets permanently limited is now *forced* to remain a PayPal customer in perpetuity against their will, and the best part is that the only way to inform PayPal you do not agree to updates to their policies is by closing your account, which I now can not even do. Their contract now literally forces me to agree to all updates from now until presumably the end of time ( unless they close my accounts for me, which again they've so far refused to do ) without any avenue for expressing my disagreement, and again that's a one-sidedness that consumers do not appreciate at the time they agree to the User Agreement. 

PayPal 's conduct in the treatment of my accounts has been predatory and their stubbornness in addressing my complaints, and even going to the great lengths to argue in arbitration for positions that violate clear public policy, goes to show that their contract is so one-sided for consumers as to be oppressive, and should be updated to make clear to consumers how much power PayPal is being granted.