Consumer complaint received 2026-03-03 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Trouble accessing funds in your mobile or digital wallet — 
Company: Paypal Holdings, Inc
State: CA

Complaint narrative:
Complaint Regarding PayPal Account Termination, Extended Withholding of Funds, and Potential Unfair, Deceptive, or Abusive Practices I am submitting this complaint concerning PayPals abrupt termination of my business account and its continued withholding of substantial business funds under circumstances that raise serious concerns regarding procedural fairness, transparency, and potential unfair or abusive practices under applicable consumer financial protection standards. During the XXXX holiday season, my PayPal business account processed approximately {$1.00} XXXX in legitimate commercial transactions. Following an increase in chargebacks, I worked proactively and in good faith with PayPal to identify and resolve the underlying issue, which was traced primarily to a billing descriptor displaying the company name rather than the product name, causing customer recognition issues. I communicated extensively with my PayPal account representative, XXXX XXXX ( XXXX ), her supervisor, XXXX XXXX ( XXXX ), and PayPal Risk personnel. Throughout these discussions, I cooperated fully, implemented corrective measures, and reasonably relied on PayPals ongoing engagement as evidence that the account remained in good standing pending resolution. Despite this active cooperation, PayPal terminated my account without prior notice on XX/XX/XXXX, providing only vague and non-specific explanations that failed to identify any concrete contractual violation, risk threshold, or compliance failure. I was not provided meaningful notice, an opportunity to cure, or any form of graduated risk mitigation prior to termination. At the time of closure, PayPal withheld approximately {$110000.00} in funds belonging to my business, representing proceeds from completed and fulfilled transactions. I was initially advised that I could request release of the funds after 30 days. However, upon follow-up at the 30-day mark, I was informedwithout individualized analysis or supporting documentationthat PayPal would instead impose a 180-day hold. PayPal has not provided a specific explanation demonstrating that this extended hold is reasonably related to actual loss exposure or ongoing dispute risk. The hold appears to be applied automatically rather than based on a proportional risk assessment. These actions raise concerns including, but not limited to : Potential Unfair Acts or Practices ( UDAAP ) : Abrupt account termination and prolonged withholding of earned funds without transparency or procedural safeguards. Lack of Material Disclosure : Failure to clearly disclose the standards or triggers used to justify account closure and extended reserves. Abusive Practices : Exercising unilateral control over essential operating funds in a manner that materially interferes with my ability to operate my business or protect my financial interests. Disproportionate Financial Restraint : Retaining a large percentage of operating capital absent demonstrated or quantified financial exposure. Constructive Possession of Merchant Funds : Continued retention of funds derived from completed transactions without timely reconciliation or narrowly tailored reserve calculations. The financial impact has been severe and immediate. Because PayPal retained critical operating capital, I have been unable to pay suppliers for goods already delivered to customers and have been forced to lay off XXXX employees. The harm caused by the liquidity restriction is ongoing and disproportionate to any stated risk. Given my cooperation, transaction history, and fulfillment of customer orders, PayPals actions appear punitive rather than protective in nature and lack reasonable proportionality. I respectfully request that the Consumer Financial Protection Bureau review this matter and that PayPal be required to : Provide a detailed, written explanation identifying the specific contractual or risk-based justification for account termination. Produce documentation demonstrating the necessity and calculation basis for the 180-day reserve period. Conduct an immediate reassessment of the held funds based on actual outstanding dispute exposure. Release the withheld funds promptly or implement a reasonable staged release aligned with verified risk exposure. Absent a substantiated risk basis, continued retention of these funds constitutes an unreasonable restraint on earned business proceeds and creates substantial financial harm. I am seeking regulatory review to ensure compliance with fair financial practices, transparency obligations, and applicable consumer financial protection standards.

Company response to consumer: Closed with explanation