Here is what happens, and remember, this is no theory or hypothesis. This is exactly what did happen in one specific case and can very easily happen to you tomorrow! You are quite happily using your PayPal account for a year or two (or ten) and then, one morning, you log in to discover that, great, you made a couple of sales overnight.
You also discover that PayPal have decided to ’limit the access’ to your account, often on the basis that they suspect some kind of fraudulent activity.
That basically means that your account is now frozen, and that you cannot get any money out of it, no matter how difficult that might make life for you.
So, what causes PayPal to freeze your account?
Well, basically anything that happens with your account, or anything that PayPal might believe could have happened is more than sufficient to trigger it (remember that they can do exactly what they like with your account?).
Now, getting any kind of definitive response or answer to a question like this is unlikely to get any useful response, but it seems likely that many of the initial ‘red flags’ that go up at PayPal are most probably computer generated.
Next, they probably also involve people checking individual cases from time to time as well, although it would appear at best improbable that a person could review each and every case, at least in these initial stages.
Some of the reasons that it is suspected that your account might be suspended are as follows:
• Too much money moving through your account. If you have previously sold $27 products and then sell something for $999, or $5000, that could be a trigger
• Logging in from too many different IP addresses, especially is the IP address is in another country (remember that this was one of the reasons shown in the ‘spoof’ email in the ‘Introduction’ to this report)
• You registered a credit or debit card (or maybe a bank account) that someone else used at some time.
• You bought an item that is a common item sold by fraudsters and cyber-criminals who use PayPal to steal
• You accessed PayPal through an anonymous or highly anonymous proxy service.
And so on and so on.
The list of the reasons why PayPal may have frozen your account are literally only bounded by your imagination or, at least, by theirs!
Note very carefully how this works.
You wake up one morning, and login to find that you can no longer access your cash. PayPal give no reasons as to why they have done this, as they do not have to. Nor, it seems, are they willing to bother with the niceties either.
They would never, for example, warn you that they suspect that there may be a problem, followed by a 24 hour grace period in which you can contact them to discuss the matter, failing which they will freeze your assets.
In other words, because of the lack of regulatory control, as it currently stands, PayPal are the prosecuting lawyer, the jury and the Judge all rolled into one.
You are guilty until you can prove yourself innocent and it is entirely your responsibility to prove that you are innocent!
So, how do you prove your innocence?
Well, in the resolution area of PayPal account, you will find a ‘task’ or several ‘tasks’ that PayPal require you to complete so that they can unfreeze the account.
Follow these instructions, and PayPal should act reasonably quickly but this is not always the case, as many of the ‘PayPal horror stories’ that can be found all over the internet will attest to.
Again, they should act, but there are no external third party regulations in place that will force hem to, thus offering protection to you, the customer.
The dangers of over-reliance
Here is an example that I hope will demonstrate what I believe to be the dangers of over-reliance on PayPal as the payment processor for your business activities.
A perfectly ordinary internet marketer of my acquaintance was running a perfectly standard IM business, selling ebooks and software from his own web sales page.
For reasons many and various, he had his account frozen or ‘restricted’ (which basically means the same thing) and thus began what eventually proved to be the very difficult task of getting the restrictions lifted.
Before the whole episode had begun, however, my friend had sold a software program for $47 and used his PayPal account to collect the monies due.
The software program was automatically delivered through the same PayPal set up that was demonstrated earlier, and was then followed up with a personal email to the customer, checking that everything has been received and that there were no problems.
This elicited a very genuine and happy sounding ‘thank you’ email note in reply.
So far, so good.
Then my friend received a note in his PayPal members area (which I saw) telling him that PayPal had decided to investigate the case.
Note that there had been absolutely no complaint at all from the customer either to the seller or PayPal themselves. It was simply that PayPal had decided to investigate because it seemed like a good idea to them, I guess.
PayPal then sent a mail asking my friend for his version of what happened.
He replied (with copies of the emails both to and from the customer querying and confirming receipt of the ordered product) within 24 hours of the request being made.
PayPal then gave the customer 30 days to send her comments or reply back to them.
She did nothing, presumably because she probably saw little reason to get involved when she had the product, and was happy using it.
So, given that she did not reply, and made no complaint at any time, the logical end result should have been that PayPal would assume that there was no problem, and let the matter drop.
What actually happened is that they sent her the $47 back!!
That is, $47 that she did not at any time ask for, $47 which she paid for a software program that she had confirmed in a written email she had indeed received (and was very happy with!)
Now, if there could be any response to such a situation that is less logical (or indeed, less fair, but that is not the point in question) then I myself cannot see it.
So, PayPal now have one very aggrieved and obviously wronged customer, but, the key question is, who is he going to complain to?
The only people he could complain to are PayPal and, as he suspected they would, they ‘investigated’ and took no action.
Now, as I hope I have emphasized sufficiently, I do sincerely believe that PayPal are making efforts to clean their act up, but his happened only a couple of months (not years) ago, and is an indication that PayPal are still a long way from getting to where they seem to be going.
The bottom line is that, however much progress the company may have made, PayPal are still only answerable to themselves and their bosses at eBay.
And whilst that situation stays as it is, then you and your business are still, effectively, at their mercy if you entrust all of your payment processing to them.
Conclusion
In general, PayPal are a very efficient company who offer a great service at very reasonable rates, and most people doing business online could not work without them.
However, by now I trust that you have realized that, whilst you have not, in all probability, had any great problems in your dealings with PayPal so far, it can happen.
Perhaps you can also see the dangers inherent in allowing an organization that is, as yet, not subject to international banking laws to have total control over your business finances and consequently your life as well.
The bottom line is that, if you are involved in online business or internet marketing in any way, I understand that you have to use PayPal, and that is an unavoidable fact.
Indeed, I use them myself every day, and, for the vast majority of what I do in my online business ventures, they are an almost perfect ‘fit’.
But, I am urging that you should not be unaware of the possible ‘downsides’ of working with PayPal.
In particular, be aware that it is a very simple matter to ensure that, should PayPal ever decide to restrict your account for whatever reason, they do not take your business down in the process.
Let me remind you that all you need to do is:
Keep as little money as possible tied up in PayPal and
When you do get money into your account, move it out of there as quickly as possible.
And, here is one final thing that I would recommend.
My friend is by no means alone in being an internet marketer who has been ‘burned’ by PayPal.
He, perhaps not surprisingly, will do everything humanly possible to avoid ever using them again, as will far more people than you possibly realize.
The fact is that, if you cannot offer alternative payment methods to PayPal, then you are risking losing business because of it.
Thus, I would strongly urge you to put the wheels in motion now, by looking at some of the alternatives.
Do not wait until you have problems before you take such a simple step towards protecting your business, because by then it may well be too late.
