Consumer complaint received 2026-04-09 00:00:00
Product: Prepaid card — General-purpose prepaid card
Issue: Problem with a purchase or transfer — Card company isn't resolving a dispute about a purchase or transfer
Company: Paypal Holdings, Inc
State: PA

Complaint narrative:
XXXX. Violation of XXXX XXXX XXXX XXXX PayPal denied XXXX unauthorized transactions totaling {$510.00} on XX/XX/year>, claiming " consistent login activity. '' This is a direct violation of XXXX CFR XXXX ( c ) ( XXXX ) ( ii ). Under federal law, a financial institution can not limit its investigation to its own internal records when an agreement exists with the merchant ( as it does via PayPal XXXX XXXX ). PayPal failed to review merchant-side data, rendering their " reasonable investigation '' legally insufficient. XXXX. Breach of Written Default Commitment On XX/XX/XXXX XXXX XXXX XXXX XXXX XXXXXXXX separate PayPal agents confirmed in writing that the merchant was required to respond by XX/XX/year>, to " prevent the case from being decided in my favor. '' The merchant failed to respond. Despite this default, PayPal refused to honor the promised judgment. On XX/XX/XXXX, PayPal admitted the merchant defaulted but maintained the denial without legal justification, choosing to circumvent their own established procedural rules. XXXX. Unauthorized Dispute Reclassification ( Procedural Fraud ) To avoid the liability of a default judgment under Regulation XXXX, PayPal unilaterally reclassified XXXX of the XXXX claims from " Unauthorized '' to " Item Not Received '' ( XXXX ) without my consent. This was a bad-faith maneuver to strip me of federal protections and subject the claims to PayPal 's XXXX internal policies instead of federal law. XXXX. Documented Internal Admission of Error Internal PayPal records from XX/XX/year>, prove their XXXX XXXX XXXX XXXX XXXX ( GCCA ) team identified a " Risk of Account Takeover ( ATO ) '' and explicitly instructed the backend team to " change reason code to UNAUTH and take action accordingly. '' So on XX/XX/year>, we see the GCCA team instruct the backend Disputes team to change the reclassified disputes back to Unauthorized and XXXX had identified a risk of XXXXXXXX XXXX XXXX telling the Disputes team there's reason to believe the transactions were Unauthorized, making " take action accordingly '' mean approve the original Unauthorized claim and issue refunds for the XXXX transactions totaling {$510.00}. Due to a catastrophic breakdown in internal communication, the backend team only changed XXXX XXXX XXXX XXXX XXXX XXXXsputes back to XXXX and that dispute was subsequently denied. On XX/XX/XXXX, a second internal note confirmed : " A PayPal employee changed some of the dispute transactions to XXXX from XXXX. This should not have occurred... all should have been kept as Unauthorized. '' Despite this internal admission of " procedural error, '' PayPal has refused to release the remaining {$400.00}. XXXX. Retaliatory Adverse Action On XX/XX/year>, immediately after I provided PayPal with the legal citations for these violations and proof of their internal admissions, PayPal permanently deactivated my account ( XXXX ). This was a retaliatory act that was not " made in good faith '' like PayPal claims. It was designed to cease communication, damage my credibility, and shift the focus away from PayPal 's violation of XXXX XXXX It is not a 'good faith ' business practice ; it is a pretextual act of retaliation intended to obstruct a federal investigation.

Company response to consumer: Closed with explanation