Consumer complaint received 2025-11-05 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Managing, opening, or closing your mobile wallet account — 
Company: Paypal Holdings, Inc
State: CA

Complaint narrative:
Subject : PayPal Wrongfully Closed My Account After I Received a Refund From a Merchant Misclassified Me as a Fraudulent Seller Despite Clear Evidence Details of the Complaint : I am a mother with a nXXXX XXXX and a long-time PayPal customer who is now being unfairly and wrongfully treated as fraudulent simply because I returned a defective product, and the merchant issued a mislabeled refund.

Background : On XX/XX/XXXX, I purchased a {$2500.00} XXXXXXXX XXXX from XXXX XXXX XXXX, using PayPal ( via XXXX XXXX ). 
The product arrived defective it leaked into the pulp bin and failed to separate juice and pulp properly so I returned it. 

This is a premium product that I had hoped to use long-term to support my health. However, due to XXXX and XXXX XXXX, I couldnt consume raw juice for many months. I barely used the product, and only discovered the defect once I finally tried it. 
The merchant was difficult to work with, but after some back-and-forth, they agreed to issue a partial refund of {$2400.00}.

However, instead of using PayPals standard refund option, the merchant sent a manual payment on XX/XX/XXXX, with this clear note : XXXX XXXX XXXX XXXX for XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX  sold XX/XX/XXXX Shortly after, the same merchant disputed their own refund, falsely categorizing it as a " beauty premium service. '' I believe this may have been done to exploit the fact that my PayPal account was originally registered for a XXXX XXXX XXXX ( now permanently closed ). I now only use this account for personal purposes. 

Key Points of Unfairness and Misclassification : I am a consumer, not a seller. I have never sold anything or accepted service payments through PayPal since my old business closed.

The merchant misused the PayPal system they sent a manual payment labeled clearly as a refund, then reversed it under false pretenses.

There is an active FTC case against this merchant for deceptive practices. This refund relates directly to that case.

> FTC Complaint Report Number : XXXX I made it clear that I wanted this transaction to remain marked as a refund, because thats exactly what it was. I did nothing wrong.

Even PayPal initially recognized it was a refund, issuing me a fee refund, which clearly shows they acknowledged I wasnt acting as a seller.

I also filed a dispute with XXXX for the remaining {$76.00}. As a result, I received a duplicate refund ( full {$2500.00} ), but I acted in good faith : I fully cooperated when PayPal reversed the overpayment.

I was transparent with PayPal, explaining that the duplicate payment was due to XXXX XXXX action, and that the merchant should work directly with XXXX to resolve it. 
I emphasized that the transaction in question was a legitimate refund from the merchant.

I transferred over {$2400.00} to bring my account balance current but despite doing everything correctly, PayPal abruptly closed my account and labeled it for suspicious activity.


Additional Context : To this day, I dont even know whether PayPal closed my account as a seller or a buyer. If I was marked as a seller that is entirely incorrect. I am not a seller. If I was treated as a buyer I was simply returning a defective product, and it was the merchants misuse of the refund system that triggered this issue, not me. 
I remained in contact with PayPal throughout this ordeal even while caring for my XXXX. 
When they called, I missed the call ( likely while attending to XXXX XXXX ). They left no voicemail. 
I called back the next morning, but by then my account had already been closed.

It feels like PayPal punished the wrong person : I am the buyer.

I returned a defective item.

I cooperated fully.

I repaid the overage.

Now Im banned and labeled as fraudulent, while the merchant walks away without consequences even though they abused the platforms policies.

It feels like PayPal punished the wrong person : I am the buyer.

I returned a defective item.

I cooperated fully.

I repaid the overage. Now Im banned and labeled as fraudulent, while the merchant walks away without consequences even though they abused the platforms policies.

Requested Resolution : Reinstate my PayPal account, with full consideration of the facts and evidence Clear my name I was not fraudulent, and acted responsibly at every step Investigate PayPals handling of this case, including the lack of communication and abrupt closure Review the merchants conduct, particularly their misuse of the refund-as-payment method, and whether that violates PayPals terms.

Company response to consumer: Closed with explanation