Consumer complaint received 2024-12-28 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:
Summary : My Paypal account has been permanently closed by Paypal in retaliation for reverting an ACH transaction that I did not authorize. 

Background : in order to maximize profit, Paypal utilizes several tactics, some of them borderline deceptive, in order to maximize the chance that the user will utilize a bank account as a payment method as opposed to a credit card. Specifically : - Paypal requires each user to have a bank account associated with their Paypal account- Paypal uses the bank account as a backup payment method for all payments. The user does not have the option to have the payment fail instead. 
- Paypal allows certain merchants to set up " billing agreements '', which are payment profiles for recurring payments that can use a payment method different from user 's default payment method. If user 's default payment method is updated, the payment method in their " billing agreements '' is not updated. 
- If the payment method previously linked to a " billing agreement '' is no longer available, user 's bank account is charged instead, not user 's default payment method. 
- The user can change the payment method associated with a " billing agreement '', however the way to do this is not obvious. I believe only a tiny percentage of users are even aware that " billing agreements '' exist, let alone know how to configure the payment method for them. 

What happened : - on or around Saturday, XX/XX/year> I made a purchase using my Paypal account to pay for it - before making the purchase I updated my default payment method to a new credit card, because the credit card I used with Paypal earlier was no longer valid - after making the purchase I noticed that the payment method Paypal used was the bank account - I called Paypal user support to figure out why my bank account was used for this purchase instead of the credit card, which was the default payment method - Paypal support specialist informed me that the merchant had set up a " billing agreement '', and the bank account was charged because the payment method previously associated with the " billing agreement '' was no longer available. 
- I informed the support specialist that it was not my intention to use the bank account for the payment and I would like to change the payment method to the credit card that I had set up as the default payment method on Paypal- I also informed the support specialist that the bank account linked to Paypal didn't have any money in it.

- The support specialist replied that they were unable to change the payment method for the transaction, but since the account was empty the transaction would fail and would then be retried with the default payment method.

- Despite what the support specialist said and despite me explicitly informing Paypal that I did not authorize the transaction, on Monday XX/XX/year> Paypal charged my bank account which resulted in an overdraft. As a result I was charged an overdraft fee. 
- I contacted the bank and informed them that the transaction was not authorized. The bank reverted the transaction and the fee. 
- As a result of this action Paypal automatically suspended my account and their automated system informed me that I needed to repay the negative balance and re-verify my identity in order for the account to be re-enabled. 
- I repaid the negative balance to Paypal immediately and re-submitted documentation to verify my identity after several months. 
- After I completed identity verification, Paypal informed me that my account was permanently disabled. Additionally the credit limit on a Paypal-branded credit card that I have has been reduced.

Company response to consumer: Closed with non-monetary relief