Mobile Commerce Insider Featured Article

January 23, 2013

Changes to PayPal Account Freeze Coming Soon

Over the years, there have been countless complaints about how PayPal, the eBay-owned payment processor, has frustrated businesses, individuals and even not-for-profit organizations with its verification process. After a long time, PayPal now says that big and aggressive changes are finally coming and it’s ready to deal with the problem.

According PayPal’s senior director of communications, Anuj Nayar, this will be a fundamental shift in its business operations. PayPal has been known to freeze funds for up to 21 days when it suspects fraud risk and according to its terms, this period may extend up to 180 days.

Getting access to your money is an even more tedious process, since PayPal requests that you provide documentation that shows your record sales and other related information, and even when you have this information handy, it can still take months to resolve an account freeze. The Web is filled with enraged blog posts, which detail stories of businesses shutting down and fundraisers forfeiting as a result of these policies.

A case in point involves Jay Lake, the award-winning author of 10 novels and a cancer survivor. After raising $20,000 in contributions, Lake tried to transfer the funds to his bank account only to be hit with a message that said that his PayPal account was frozen.

According to Lake, PayPal wanted him to provide receipts, shipping information and business paperwork, which obviously did not apply to him. Unfortunately, there was no way to bypass the process. Only after firing off a sarcastic tweet at PayPal, and a little help from his friends, did he get PayPal to listen. They even tossed in a corporate donation to Lake’s fund.

PayPal intends to be clearer with consumers on how to get out of such situations. For example, Nayar hinted to the possibility of doing away with mailing documents for verification when dealing with an online payment company like PayPal.

Its time PayPal did something about its user agreement, after all, with up and coming rivals like Square, WePay and Stripe, they may not be the center of online payments and processing for long.




Edited by Brooke Neuman




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