The story of a small business and the Evil Paypal Empire.

[Garage19]

I run a small business with an annual turnover of 80k. We have a small webshop and supply goods internationally. We use paypal as our web merchant but use World pay for our phone payments.
I have had a paypal business account for 13 years. It has a good rating and I have never been a naughty boy. When I get an order paid into paypal from the website I usually move the funds to my business account within 24 hours.
The problems started five weeks ago when I logged into to paypal to find my account had been limited. I could not withdraw or spend any of MY money. The worse thing was that recently I had just been letting the funds stack up in the account and not withdraw after every order. There was now several grand sat there. This is no small amount in terms of cash flow for a business our size. It almost seemed like Paypal had been waiting for the account balance to go up before they limited it!

So why had I been limited? According to the email I received it was because I was taking more funds than normal (business was doing well) and they wanted to carry out an audit.
I had to submit a whole host of information. There were at least 20 questions. What was my turn over, how much did my products cost me, copies of supplier invoices, last years P+L statement from my accountant, tracking details of random orders etc. It literally took me hours to answer and collate all the evidence.
Once submitted the wait began. There were 5 phone calls all with promised resolution timescales that all flew past. Emails were just returned with generic computer generated answers.
In one conversation I demanded to know what I had done wrong. No answer could be supplied. I was then informed that clause 10.3 means Paypal can hold onto my funds for 180 days with no reason required!
I asked how to make a formal complaint and was told to do it online. The catch being they had 8 weeks to respond.
I finally was called from a foreign number by a Spanish gentleman who apologised for poor service and said he would sort it. Once again he confirmed I had done nothing wrong and my account was in good standing.
I then got and email explain that Paypal were going to keep 2k of my money and take 20% of everything that comes through my account from now on. The 2k seems to have no timeline as to when I might get it back the 20% is 60 days.
They said they might think about releasing the 2k when the funds from the 20% takings get up to that level.
This puts me in a real predicament. After the way they treated me I am in the process of changing my website over to use Worldpay as a payment method. This means I am very unlikely to take the 10k through paypal required to ever get my 2k back.

The only option I have left is to wait 180 days and then ask for it again.
Basically what paypal have done is remove all my cashflow in one swipe so I will struggle to trade and then ensure that I don’t get any profit for the next two months by taking the 20%. They say they are doing this in case my business fails but what it really feels like is they are trying to make my business fail.
Did you know paypal are not regulated by financial services authority in the UK? Although they do st loads of business in the UK they are “officially” based in Luxumberg so get away with no regulation of their practices.
So my warning to all you business owners that have to do business with paypal is always, always, always empty your accounts when funds appear.

[Garage19]

If you email Paypal they send you generic email responses.

It seems the only way you can contact Paypal is by phone. This means you have no written record of your correspondence with them. I really would like to have a response about why they are holding onto my money in writing.

I will try the email address of the UK director and see if I get anything back from that.

The more you look into it on the internet the more other dodgy actions you find they have taken with peoples money. The thing is, they are by all intents and purposes a bank but some how they get away without having to comply with any of the UK financial regulation that any other financial service in the UK has to.

I think it is a case of big American corporation thinks they can do what ever they like. I bet they do not pay hardly any tax in the UK either.