Paypal Penalizes Good Samaritan

Thanks to some zealous Paypal security, mixed with tech snafus and a little lack of information about how Paypal works, Max had to go through leaps and hurdles to retrieve his money after he committed the crime of lending money to his friend.

Now he’s even been barred from using Paypal and as a consequence, can’t indulge his Ebay passions

The baroque series of events leading to this tragic end, after the jump…

Max writes:

    “I have been an avid ebay and paypal user since the companies started many years ago, and had no issues until I tried to use a few of the more “advanced” paypal features, you know, like actually getting my money out of the net and into my wallet. Since I rarely sold items, and most of my ebaying was purchasing odd trinkets, I was in the habit of only adding the funds I needed for each transaction to my paypal account from my bank account.

    My best friend wanted to buy a used laptop on craigslist but did not have the cash in his account, and did not want to incur the absurd interest rates for a large cash advance on his credit card. Being the nice guy that I am, I offered to loan him the money he needed and since I was going back to school across the country, he could just paypal me the money when he had it in the next few months.

    So I take out the money he needs, hand it over to him, and fly across the country. I get a call from him and he tells me he decided not to buy the computer, so he’s already paypaled it back to me using his credit card, which he is goin to pay off using the cash I had given him. Sure enough, a lovely email showing a payment for $X to me. Yay! So I accept and there it all is in my paypal account. The real fun started when I tried to withdraw it.

    Paypal imposes a withdrawal limit on basic accounts and because I didn’t want to wait, I took their “advice” and upgraded to a premier account, which was free but imposes some small commissions on things I was not planning on doing anyways. So I upgrade and head off to class. Not three hours later I get an email saying my account has been limited and my funds temporarily frozen due to suspicious activity. I could not send or withdraw and funds ithout completing steps to provide paypal with more information. They had me verify my address via telephone, which I did instantly, reconfirm my bank account, which I started the process of doing, and confirm my social security number, which I tried to do but it just wouldn’t work.

    So I called customer serivce and told them that I could not verify my social security number because the web form was not working properly. They said to try again in a few days, so I did, and still no luck. I called back, and got them to input it ino their system manually. So by that evening, all of the steps had been completed to unlimit my account. What now? Well I received an email stating that my account would be reviewed by “a panel of experts” and I would recieve notification of an outcome within three days. A week went by and I got nothing. So I called and got transferred around and finally got in touch with someone in account review. They said I had to perform the steps required and then my account would be reviewed. I told him that I had already completed the steps, and he checked and said their records reflected that as well, and he would mark my account with a flag to be reviewed as soon as possible. Nobody would tell me why my account had been limited in the first place.

    Four days later, I get an email from the review board stating that my account cannot be restored to full access because they require more information about the case. If I would please log into paypal and go to the resolution center and give them the required information. I go to the resolution center and everything looks the same as it did before, with a message saying something to the effect of “You have completed all verification steps, a panel of experts will review your account and inform you of the outcome within three days.” Nowhere in the email or in the resolution center did it say what information they needed, so I called customer service again, and got them to reflag my account for review and even got them to note that I had already given them all the requested verification information, Five days later, “your account cannot be restored to full access because we require additional information. Please log in to your paypal account and visit the resolution center.” Great. Same deal.

    By this time I’m starting to wonder what’s going on and why my account was frozen to begin with. I call customer service, again, and a couple “can I speak to you supervisor” lines later, I reach a woman who let’s me know what’s up. She tells me that I received a payemnt of $X on X date and was I aware of the source of this payment? I said yeah it’s from my best friend, he was paying me back for money I had lent him. She asked me what the money was for, which I found a bit intrusive, but I figured what the hell and I told her it was for a computer. She said that paypal did not allow credit card payments in excess of a certain amount to be withdrawn, which makes no sense to me, but it was their policy so even if my account was restored to normal I could only paypal it to someone else. Great. So I’m stuck with oodles of e-currency and I can’t even do anything with it, much less actually get it into my bank account.

    And meanwhile I need to pay for my ebay purchases, so I open a new paypal account with a different bank account and am using this just like my last one to pay for the auctions I would win. My old account was still limited. A week later my new account gets locked, and I get an email stating that some of my personal information matches an account that has been limited, so my new account has also been limited! Two limited accounts. Great.

    Because I had “failed to provide them” with the mysterious additional info they wanted, they sent the money back to my friend, and he paid my mom and she deposited it in my bank account so I at least got that taken care of.

    My accounts are now both completely frozen, and all associated information permanently barred from the paypal system. This means I have not bought a thing on ebay for months, because I have to have my dad use his account to pay and who wants to deal with that? I was only trying to use paypal for its intended purpose to help one of my closest friends, and they have in turn given me countless hours of grief and completely halted my acquisitions of cool trinkets from ebay. Thanks a bunch, you swarthy paypal overlords.”


Edit Your Comment

  1. ValkRaider says:

    So I have a paypal account that I used occasionally. I logged in regularly to change the password for security sake…

    Well, as luck would have it, some time around the year 2001 I forget what I had just changed my password to. So I can’t log in.

    OK, so I can’t remember the answer to my “secret question” or spell it wrong or whatever. Yes, up until now this is ALL MY FAULT. I take the blame, no biggie.

    So I call them.

    In order to reset any information they need the credit card number that is associated with the account. However my credit card had expired and been renewed since I had last actually purchased anything with Paypal – so the card number is different. I no longer have the old card or any old paperwork (we are talking a couple years here) and the credit card company doesn’t have the records anymore either (or that they are unwilling to dig them up and give them to me).

    So I try to open a new Paypal account – but get denied for reasons similar to the poster here – too many personal details match the old account, so they won’t let me open a new one.

    So once a year or so I call them and try to straighten it out, same problem each time.

    Finally, about a month ago – 5 years later – they finally let me close the account (because of the over 5 years of inactivity). So now I could conceptually open a new account – but I am hesitant due to stories like this and my personal experiences.

    It seems like they are so trying to prevent fraud due to their bad rep – that they make it also impossible to deal with any slightly out of the norm problems.

    In my opinion they should stay just as strict, but allow things like sending paper forms to the account address for signatures and waiting periods and whatnot to deal with abnormal situations while keeping users safer from fraud. I am sure that it can be done…

  2. I realize it’s too late for this poor soul, but if it’s been less than 30 days since you sent the money, the best thing to do is to have your friend go into Paypal and refund the payment. That way you don’t have to deal with credit cards, Premier accounts or any charges. I’ve had to issue refunds on occasion and it works just as advertised.

  3. billhelm says:

    they probably suspected these transactions were fraud, and their bureacratic resolving process sucks. no surprises here.

    Also, loaning money to friends usually ends badly, in my experience.

  4. Nottma says:

    Wow talk about bad luck! Using paypal as a medium to pull cash from credit card is an instant identity theft flag. Having two paypal accounts for the same person is another identity theft flag. If I put myself in their shoes, I would of been suspicious, however I think they handled it horribly and ignored fundimental rights. I would tell them to return the funds to his credit card and have him mail me a check.

  5. Special K says:

    im not even going to bother reading this article and i can already say that i absolutely despise paypal. they have screwed me over a few times, and i’ve heard stories from others as well.

  6. I was victim to a similar problem. I changed bank account numbers after someone stole my checkbook, and a year later I tried paying for something via Paypal forgetting to make the change in their system. They wanted me to verify both the old account number and the new one and also wanted me to arrange a three way call between the bank and I. The bank wouldn’t wait on hold for PayPal, and Paypal wouldn’t wait on hold for the bank. I sent letters from the bank verifying all info, and PayPal promised to review, but always came back with the same crap asking me to reverify the info again and again.
    What is lacking from above is the hold time before anyone at PayPal picks up the phone, or between transfers… 30 minutes is a norm.
    Eventually I gave up. Sucks for them, because I use eBay a hell of a lot more now, and I advise anyone I can to avoid PayPal for the above reasons, which are all to common.
    Perhaps not worst of all is that my PayPal account still has $50 of mine in it that they’ve made no effort to return to me.
    Paypal does suck.