Consumer complaint received 2023-03-21 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: NY

Complaint narrative:
On XX/XX/XXXX, Paypal sent me the following email : You can no longer do business with PayPal. After a review, we decided to permanently limit your account as we found potential risk associated with it. You'll not be able to conduct any further business using PayPal. Based on this decision, if applicable, you are no longer eligible for PayPal Seller Protection as per our User Agreement. You'll also be charged a High Volume Dispute fee based on your activity for all existing and future cases you receive. Any bank or credit card information that's linked to your PayPal account can not be removed nor can it be added to another account. You can still log in and see your account information but you can't send or receive money. If you have funds in your PayPal balance, we'll hold it for up to 180 days. After that period, we'll email you with information on how to access your funds. We regret any inconvenience this may cause. 

My account is rarely used, only to transfer small amounts of money to a sports betting site. I assumed my relative inactivity was the cause for the limitation, rather than any risk ( Ive had no fraudulent transactions associated with my account ). I went to their website, attempting to get to the bottom of the issue, but there was no additional information to be had. All links led to the same dead end and the following statement : " You can't use PayPal anymore. At PayPal, we value a safe community for our customers to do business. We noticed activity in your account thats inconsistent with our User Agreement and we no longer offer you PayPal services. Based on this decision, if applicable, you are no longer eligible for PayPal Seller Protection as per our User Agreement. This will apply to all existing and future cases you receive. Any bank or credit card information linked to your PayPal account can not be removed nor can it be used to create a new account. You can still log in and see your account information but you cant send or receive money. Any money in your balance will be held for 180 days, after which well send you an email with instructions about transferring your money. Reference ID : [ redacted ] '' While my account remains limited, it is still open and vulnerable to phishing attempts, like one I received on XX/XX/XXXX in the form of an invoice. I immediately knew that the invoice was fraudulent, someone I dont do business with. Per the suggestion on Paypals website, I forwarded the phishing attempt to their dedicated email address XXXX. I returned to their website, tried to close my account, in order to prevent this from happening again, and was denied, with the limitation being cited as the reason for the denial. So, I decided to call. 

On XX/XX/XXXX, I called Paypal and, through their automated system, expressed interest in deleting my account. I was quickly connected to a customer service representative. 

I provided personal information to the representative, in order to confirm my identity. She had her confirmation and asked what I would like to do. I said, " I would like to close my account. '' She took a minute and said, " It looks like your account was limited. '' I told her I was aware of this, and that if they're not going to allow me to use the account, I would like it closed altogether. She sidestepped the request, expressing that that cant happen because my account had received this limitation, the details of which are not provided to me by Paypal. 

She repeated the line that Paypal had decided to " stop doing business, '' and I said I agreed : " I don't want to do business with Paypal either, so there's no point in my account existing. '' I still could not close my account. I asked, " Does that mean that Paypal is holding my financial information hostage? '' She sidestepped the question. I said, " So Paypal is going to retain my financial information in perpetuity and I have no recourse against that, '' which the representative confirmed, adding, Its in our bylaws. I asked, Is this practice uncommon? She replied, No it is not. 

So, through fine print, Paypal has gotten users to agree to allowing Paypal, through its own internal security ruling ( which they do not disclose to the user ), to justify effectively placing in limbo any account they deem unworthy while still maintaining possession of the users personal financial information. Considering the importance of a persons financial information and its bearing on their livelihood, how is this practice permitted by the federal government? 

I understand that it's in Paypals bylaws, but buyer beware does not apply in this case. This was a business relationship, Paypal exploited it, and now my personal livelihood is at risk. Additionally, could I now be under threat of a High Volume Dispute fee based on [ my ] activity for all existing and future cases [ I ] receive, with future phishing invoices counted as cases? 

All is unknown and I must worry about all of it, because Paypal refuses to dispose of my financial information. This practice should be punished as a base scam, one that only exists to retain vital financial information -- -the misuse of which could greatly jeopardize a person 's livelihood, moreso since financial information may be no longer eligible for PayPal Seller Protection. Paypal is one of the largest digital wallet companies in the world, with millions of users. The CFPB should take immediate steps to pursue investigation of and action against Paypal, ceasing this exploitative, potentially hazardous practice, and allow me to remove my financial information from their possession.

Company response to consumer: Closed with non-monetary relief