Consumer complaint received 2025-02-04 00:00:00
Product: Checking or savings account — Checking account
Issue: Managing an account — Funds not handled or disbursed as instructed
Company: Paypal Holdings, Inc
State: MA

Complaint narrative:
I am writing to file a formal complaint regarding the unlawful freezing of my PayPal account and the seizure of my funds {$4000.00}. On XX/XX/scrub> 2021, I created a PayPal account and agreed to PayPal 's User Agreement. On XX/XX/year>2021, PayPal froze my account citing high-risk activity. Despite my repeated attempts to resolve this issue, PayPal has provided no specific details or reasons for the account freeze. 

I believe PayPal 's actions violate federal consumer protection laws, specifically the **Electronic Fund Transfer Act ( EFTA ) ** and the **Federal Trade Commission Act ( FTC Act ) **.

# # # Violation of the Electronic Fund Transfer Act ( EFTA ) : 1. **Failure to Provide Clear Information** : Under Section 908 of the EFTA, consumers are entitled to receive information about the reasons for any account restrictions or fund holds. PayPal 's failure to disclose specific reasons for the account freeze is a direct violation of this provision.

2. **Resolution Timeline** : The EFTA mandates a specific timeline for resolving disputes related to electronic fund transfers. Holding my funds indefinitely without providing a clear resolution timeline or procedure violates Section 908 and Section 909 of the EFTA. Financial institutions are required to investigate and resolve disputes within 45 days. PayPal 's indefinite hold far exceeds this legally mandated period.

3. **Consumer Protections** : The EFTA was established to protect consumers ' rights in electronic fund transfers. By failing to provide clear information and an appropriate resolution timeline, PayPal is undermining these consumer protections and violating the intent of the EFTA.

# # # Violation of the Federal Trade Commission Act ( FTC Act ) : 1. **Unfair Practices** : Section 5 of the FTC Act prohibits unfair or deceptive acts or practices in commerce. An indefinite hold on my funds without providing a clear explanation or due process constitutes an unfair practice. This is particularly egregious given the significant financial harm caused by the prolonged restriction of access to my funds.

2. **Deceptive Practices** : The FTC Act also prohibits deceptive practices. PayPal 's refusal to provide a clear explanation for the account freeze and the subsequent indefinite hold on my funds can be considered deceptive. By not disclosing the reasons for the hold, PayPal is misleading consumers about the nature and extent of their risk management practices.

# # # Violation of General Legal Principles : 1. **Uniform Commercial Code ( UCC ) ** : PayPal 's terms of service must comply with the UCC and other relevant federal regulations. The UCC requires that the terms of service be fair and transparent. By failing to provide a clear explanation for the account freeze and holding my funds indefinitely, PayPal is not meeting these standards.

2. **Fundamental Fairness** : Legal principles of fairness and due process require that financial institutions provide clear reasons for taking adverse actions against consumers. PayPal 's actions in this case are arbitrary and lack transparency, violating these fundamental legal principles.

# # # Federal Law Supersedes Terms of Service : While PayPal may rely on its User Agreement to justify account freezes and fund holds, it is important to emphasize that **federal laws** such as the EFTA and FTC Act take precedence over any terms of service or internal policies. PayPal 's User Agreement can not override or nullify the protections afforded to consumers under these federal statutes. PayPal is obligated to comply with federal laws, regardless of its internal systems or risk management policies.

# # # Conclusion and Demand : I respectfully request that PayPal immediately unfreeze my account and release my funds. If this issue is not resolved promptly, I will seek legal action to recover my funds and any damages incurred due to PayPal 's actions. PayPal 's conduct is not only a violation of the EFTA and FTC Act but also undermines consumer trust and confidence in their services.

Thank you for your attention to this matter. 

Sincerely, XXXX XXXX XXXX

Company response to consumer: Closed with explanation