Consumer complaint received 2025-03-22 00:00:00
Product: Checking or savings account — Other banking product or service
Issue: Managing an account — Funds not handled or disbursed as instructed
Company: Paypal Holdings, Inc
State: CT

Complaint narrative:
Summary : PayPal is holding my income hostage, has permanently disabled my new, valid business account with no or insufficient explanation, and is denying me support.

Timeline : Around XXXX XX/XX/XXXX, I created a PayPal account for my single-member, pass-through LLC. This LLC has an EIN.

I struggled for ~2 months to verify the account with PayPal . I provided each requested piece of documentation in valid, legible formats. Their agents insisted that I had not uploaded the documents through the PayPal Message Center when in fact I had. I spoke with PayPal agents on : - XXXX XX/XX/XXXX ( 7 minutes ) - XXXX XX/XX/XXXX ( 6 minutes ) - XXXX XX/XX/XXXX ( 20 minutes ) - XXXX XX/XX/XXXX ( 16 minutes ) On my fourth call, I spoke to an agent who said " Oh, there's your information. Yes, you sent it correctly the first time. '' They verified my account and activated it the same day. 

On XXXX XX/XX/XXXX I made my first payment to XXXX using PayPal, which went through with no issue.

On XX/XX/XXXX I invoiced my first customer, a registered and valid small business and personal friend, using PayPal 's invoicing tools. The amount was around {$430.00} USD. 

On XX/XX/XXXX, my customer paid their invoice. PayPal sent me an email stating " When you're a new seller, we hold your received sales for up to 21 days so we can verify your identity and monitor your transactions. '' To " help get future funds faster '', PayPal recommended I " Increase [ my ] sales by processing 10 transactions and receiving {$200.00} USD '', and " Avoid disputes by communicating clearly with customers. '' On XXXX XX/XX/XXXX, I logged into PayPal to withdraw my funds. PayPal stated that they required more information before disbursing my money, and asked for some general information about my business. They requested to know : - What business I engage in - The address where I store my stock - What types of goods I sell I answered these questions accurately : my business is computer and IT services. I do not sell product or keep it on hand. And I sell services, not goods.

2 hours later, PayPal sent me two nearly identical emails within 60 seconds of each other. Both state the same thing : " Were no longer offering PayPal services for this account. '' But give different justifications : Email 1 : " Why is this happening? Based on the information we have today, customers were dissatisfied with activity from this business. '' ( My sole customer is a friend who is satisfied with my service. ) Email 2 : " Based on the information we have today, there was activity on this account that we can not support. '' ( No business party to any of my transactions engages in harmful, malicious, fraudulent or otherwise objectionable activity, conducts offensive or controversial action, or has done anything to to violate PayPal 's Acceptable Use Policy. ) The emails go on to state that PayPal " may hold any funds in my account for up to 120 days to cover things like chargebacks or other financial liabilities. '' In the evening of XXXX XX/XX/XXXX I called PayPal support ( 16 minutes ) to attempt resolution. The rep stated that my account was permanently disabled, that it could not be re-activated, and that no justification for the account closure could be given. I requested escalation and was promised a call back " within a few minutes ''.

Hours later I am waiting for that call. In the meantime, here is the state of affairs : 1 : It took nearly 60 days to open and validate the account. At this time, PayPal informed me IN WRITING that I was clear to send and receive money.

2 : Between validation and my first invoice, PayPal was happy to accept my money in the form of outgoing payments to merchants.

3 : When it came time to accept funds through PayPal, they asked for additional, invasive, mostly irrelevant information- like the address of the non-existent warehouse where I store my non-existent goods. There were no previous warnings that I was not cleared to receive money.

4 : When - and only immediately after - money was finally received into my PayPal account, PayPal arbitrarily locked the account, thus holding my customer 's money hostage. They failed to provide valid justification, and instead provided blatantly inaccurate, factually impossible, and confusing information.

5 : When I attempted to access support, PayPal was unable to provide any reasoning for the account disablement and would not comment on the reasoning shown in the emails. They failed to respond to my inquiry within the time window they promised after I explicitly expressed concern about not getting a response in a timely fashion.

Conclusion : As a personal, XXXX XXXX XXXX of over 10 years with 100 % positive feedback and a personal holder of PayPal XXXX  and XXXX accounts, I am an unproblematic, predictable, loyal customer. None of my accounts have ever had strikes, late payments, chargebacks, overdraws, negative feedback or complaints. I have paid PayPal and XXXX PayPay has invested in our relationship by conducting themselves in ways that are at once unpredictable, problematic, and in violation of good faith.

As a condition of this denial of service I am also prohibited from removing my credit cards or banking information from my PayPal account, which is a massive security risk.

The money belongs first to my friend and customer ( should they choose to charge it back ) and then to myself : it does not belong to PayPal. Whether by malice or negligence, PayPal has erased a decade of accumulated trust and social capital by making me jump through hoops and stealing my income with no explanation, and has made no effort to apologize or to restore this trust.

Company response to consumer: Closed with explanation