Consumer complaint received 2017-08-27 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Problem adding money — 
Company: Paypal Holdings, Inc
State: NV

Complaint narrative:
On XXXX/XXXX/XXXX I received an email from PayPal Inc.that stated the following : " A direct debit you requested on or after XXXX XXXX from your XXXX XXXX account was rejected by the bank. A new compliance regulation requires that a physical address be available on all accounts. 

Your XXXX USD transaction with the merchant completed, but PayPal never collected the funds. In order to correct this oversight, PayPal will be debiting your PayPal account for this amount in 5 business days. 

If your PayPal account balance isnt sufficient to cover the amount of the transaction when we debit your account, your PayPal balance will become negative. Please ensure sufficient funds are in your account to prevent a negative balance. 

To fund your balance, you can add funds through a transfer from a bank account or receive a payment into your PayPal account. 

We apologize for any inconvenience this issue may have caused and appreciate your understanding. If you have any questions, contact us by using the Help & Contact link on any PayPal page. 

Thank you for being a PayPal customer. '' I attempted to transfer the sum of {$7.00} from my bank account to my PayPal account, and was blocked by PayPal from doing so. I received a followup email stating the following : " We need your help resolving an issue with your PayPal account. 

What 's the problem? 

Before we can offer you certain products and services, federal regulations require that we collect specific information to verify your identity. This information includes your name, address, date of birth, and National Tax ID or Social Security Number. We have n't been able to verify your identity using the information you provided, so we need some additional documentation from you. 

Until this issue is resolved, you 'll be able to log in to your PayPal account but you might not be able to add money to it or use some of your account features. 

How can you help? 

It 's usually pretty easy to take care of things like this. Most of the time, we just need a little more information about your account or latest transactions. 

Please log in to your account and go to the XXXX XXXX to find out what you need to do. 

Case ID Number : XXXX Sincerely, PayPal '' I called PayPal to attempt to resolve the problem. I was routed to the " Limitations Team '' where I was told that I was required to provide what was essentially my complete and confidential identity information to resolve the problem, and that there was no other way to do so. This information included my name, date of birth, postal address, physical address, and full social security number. I told the representative that I would do so, but only was doing so under extreme duress. I asked why I was required to do so, and was told " Federal Regulations require us to collect this information. Otherwise your bank will not allow you to transfer funds. '' After I provided the information, I received the following email : " Our review is complete and we have returned your account to regular standing. 

We appreciate your patience and thank you for your help in making PayPal the safest and most trusted online payment solution. 

Thanks, XXXX PayPal " I went to my bank immediately, explained the situation, and was told to call the bank 's fraud department. I returned home and contacted the fraud department. I asked if PayPal was required by Federal regulations to collect the entire confidential identity information of one of their customers. I was told absolutely not, as they are not a bank, and are only a third-party money processor. I was told that such practices are fraudulent, and compromise your identity. I was advised to close all accounts associated with PayPal, and post a fraud alert with credit reporting agencies. 

I contacted PayPal again, and requested to speak with a supervisor of the PayPal Limitations Team. I was put in touch with a representative, and explained the situation. She said that she would contact the bank 's fraud department at straighten the situation up for me. She did contact the bank 's fraud department. At that time I had found a ruling by the FDIC that declared that because PayPal did n't meet the federal definition of an entity accepting deposits as a bank, hold any physical money or have a bank charter, it was not a bank. As a result, most states license PayPal as a " money service. 

The supervisor from the Limitations Team threatened that if I did n't believe that they were under Federal Banking Regulations, that she would turn this case over to PayPal 's legal department. At that point I was impelled against my wishes to back down from my complaint. 

Afterward, I spoke further with the bank 's Fraud Department worker, and explained that I was putting a total block on all PayPal transactions with my account after the {$7.00} payment had cleared, and that I was closing my PayPal account after 13 years of activity because of their misrepresentations. 

PayPal has caused harm to me financially, through not being able to easily conduct online commerce in the manner I had been using for 13 years. PayPal has also created the potential for identity threat by require me to provide them my full identity information, which now resides in their databases. Furthermore, PayPal had threatened me with potential legal action for disagreement with their policy of identity collection. I am requesting damages from PayPal for the major disruption to my life that this has caused. I am certain that it has done the same of more to countless other customers of PayPal.

Company response to consumer: Closed with explanation