Consumer complaint received 2022-12-05
Product: Money transfer, virtual currency, or money service — Domestic (US) money transfer
Issue: Money was not available when promised — 
Company: Paypal Holdings, Inc (FL)

PayPal has effectively taken {$5000.00} and made it indefinitely unavailable to the payee or the payor without explanation or recourse. 
We are a small property & casualty insurance agency in XXXXXXXX XXXX  We've had a PayPal account since XXXX to process premium payments when our clients wish to pay by credit card. In all of that time PayPal has never required us to keep a reserve balance in the account. 
In late XX/XX/XXXX XXXX of our clients, who is a medical doctor, elected to purchase a medical professional liability tail policy from us. The premium is required by the XXXX to bind coverage. The policy needed to be made effective XXXX XXXX to avoid a lapse of coverage. To hasten completion of the transaction, the doctor elected to pay by credit card using two separate cards. Because the amount was much larger than we usually invoice, I called PayPal to ask if there would be any issues. I was advised by their representative that there are no limitations or requirements on the account that would present an obstacle to receiving payment. 
On XXXX XXXX, XXXX I created two invoices on PayPal ( to accommodate the doctor 's preference to pay using XXXX cards ) for the amount of {$28000.00}. The doctor made her payments by credit card on XXXX XXXX and notified us by email. 
PayPal subsequently refused to release any of the money, pending a copy of my driver 's license and my U.S. Passport. I provided both and answered a set of questions regarding the transaction. 
On XXXX XXXX, XXXX all but {$5000.00} of the doctor 's money was transferred to our trust account. I subsequently called PayPal to ask them to release the {$5000.00} and explained to them ( as I already had in writing at their behest ) that the doctor 's insurance would lapse, if we did not send all of the money to the insurance company. I explained that this agency acts as a fiduciary and can not afford to have money suspended by PayPal, especially without warning or explanation, and that I had cleared the transactions with one of their representatives a week earlier. This time I was advised by PayPal 's representative that the {$5000.00} is being held indefinitely as a " reserve. '' The user agreement is extremely vague about their contractual right to do this but the rep told me the case had been escalated and that I would hear an answer within a few days as to whether they are willing to release the {$5000.00}. 
On XXXX, having heard nothing from PayPal XXXX I called PayPal XXXX close our account and instruct them to release the money either to us or back to the payor. I advised PayPal that any rationale for keeping money in reserve no longer exists as we would no longer be doing business with them. I also reiterated that I wanted the money either forwarded to us, as authorized by the payor, or returned to the payor. Either way, we were concluding our relationship with PayPal effective immediately. The representative I spoke to transferred me to a recorded message which states that PayPal could not assist with my request, referred me to their online " resolution center '' and hung up on me. PayPal 's website simply states that you can not close an account with money in it. 
At the moment, PayPal is sitting on {$5000.00} that a doctor has authorized as payment to this agency, which we are required to transfer to an insurance company as payment of premium. Without payment, the doctor 's insurance may lapse, leaving her vulnerable to uninsured claims.