I had just signed up for a PayPal account too, and was in the process of verifying my bank account. Now I think I don’t want to get involved with these guys.
Mark Perkel learned this the hard way, when PayPal gave his account “limited” status after deciding it didn’t like some of the content on his website. Furthermore, right before it shut down his account, it reversed a deposit that one of his clients had transferred to his PayPal account, but it did not return the money to his client’s bank account after removing it from Perkel’s bank account.
According to PayPal’s User Agreement, (It’s probably the Accessible Use policy regarding adult material that he violated.), if it chooses to make your account “limited,” (PayPal has the authorization to do so at any time based on its own discretion), it can and will hold the funds in your PayPal account for 180 days.
Turns out that money is in limbo until Perkel writes PayPal in a secure email on its website and asks for this to be done explicitly. This is despite the fact that he asked them to do so over the phone. (And why wouldn’t they have already done so anyway? – if they were reversing the transaction, when the money left Perkel’s account, it should have gone back to where it came from.)
PayPal claims that they hold the money for 180 days to “protect ourselves from potential reversals” to the accounts. But there’s a free speech issue here – why is PayPal going around making judgements about it’s customers’ websites anyway? Who’s going to be next? Is your PayPal account something you don’t want to keep too much money in at any one time, since they can freeze your account and hold it up for 180 days?
These are the questions going through my mind after listing to this MP3 of Marc Perkel talking to Paypal.
If you’re listen to the MP3, and in a hurry, the relevant portion is at about 6 min 50 seconds into it. But if you’ve got a minute, listen to the whole thing. It’s pretty interesting.
So Perkel may have violated their user agreement, but closing his account without giving him a chance to take his money out, and then holding on to not only the money he had in his account, but the money his client had transferred to him the day before the account was closed doesn’t seem right.
Marc’s started an anti-paypal website, to let people know about his experience, but I’m not telling you to boycott these guys necessarily. I just want you to know about this so you can make your own decision. Maybe there’s a perfectly good reason why PayPal works for you. Fine.
(This MP3 might also have some great samples in it for you Dee Jay/Audiophile types. Don’t say I didn’t tell ya 🙂
Here’s some information for anyone who is interested in the news story about PayPal and their lawsuit settlement over freezing customer’s accounts:

PayPal settles customer suit

Here’s the full text of the article in case the link goes bad:
http://news.com.com/PayPal+settles+customer+suit/2100-1038_3-5233490.html
Last modified: June 14, 2004, 4:38 PM PDT
By Paul Festa
Staff Writer, CNET News.com
Print story E-mail story Your take
PayPal has reached a preliminary settlement with some customers who accused the eBay unit of illegally freezing their funds.
The company on Friday said it will pay a total of $9.25 million to settle the federal class-action suit, $3.4 million of which will pay lawyers’ fees and costs.
PayPal admitted no wrongdoing in settling the claims, which were filed in 2002 as part of two federal class-action suits that also alleged other customer service deficiencies.
Those two cases were merged, and a third case, pending in California state court, will be dismissed if the settlement agreement is approved.
“In this agreement, PayPal does not acknowledge that any of the allegations in the case are true,” PayPal said in an e-mail to customers. The unit “entered into the settlement agreement to avoid further costs of litigation and to devote resources to more productive areas of our business.”
An attorney for PayPal customers called the settlement a win not only in securing a financial reward, but in changing the way PayPal does business.
“I think we got it right,” said Daniel Girard, a partner with Girard Gibbs & De Bartolomeo in San Francisco. “The settlement provides for cash recovery and also for a series of changes to the operating procedures at PayPal.”
Between June and September 2003, while the litigation was still pending, PayPal released $5.1 million in frozen customer funds, Girard said. As part of the settlement, PayPal agreed to change the way it handled dispute resolution.
PayPal acknowledged that the settlement included an injunction mandating certain changes to the company’s procedures, but maintained that the modifications had come about independent of the litigation.
“PayPal has always been looking for ways to improve customer service,” said company spokeswoman Amanda Pires. The litigation “didn’t really change the way PayPal has been operating. We have improved our customer service as part of our normal course of business.”
PayPal claims 45 million member accounts around the world.
The settlement was the product of mediation, begun early last fall, before a court-appointed special master. Within a week, the parties plan to file the preliminary settlement with the U.S. District Court in San Jose, Calif., for approval.
The case involves PayPal customers who used the service between Oct. 1, 1999 and Jan. 31, 2004. European Union residents are excluded.
PayPal said it will publish the allocation plan in July or August. Customers will be informed of settlement terms within two months of the court’s preliminary approval.
Here’s the text from the website in case the link goes bad:
http://paypal.ctyme.com/paypal/paypalsucks.htm
PayPal Sucks – Closed my Account – Keeping my Money
I’m in the process of building my PayPal sucks site and this blog entry is the first step. It’s the art of being an asshole. I’m sure I’m not the only one that PayPal has ripped off and probably won’t be the last – but I will be the one they remember the most.
I got an email today from PayPal that they are closing my account. The reason for closing my account is that they claim they don’t like the content of my web site – specifically my site on Sexual Issues where I have my Men’s Guide to Escort Services – a guide to interacting with hookers, The Nerd’s Guide to Sex – a guide teaching men how to properly have sex with women, and The Shy Girl’s Guide to Becoming a Whore – a women’s guide to surviving the Bush Ecomony.
So – because they didn’t like my web site content they not only decided to cancel my PayPal account – but to also keep my money for 180 days. And – I had transfered my money out of PayPal yesterday – but after closing my account today they reversed yesterday’s transaction and are going to steal my money.
The people at PayPay are real mother fuckers. But I to am an asshole and I don’t get mad – I get even. Whenever I get screwed by someone I use my talents of being a real prick to turn the tables on them and make them feel the heat.
PayPal claims that according to their End User Agreement that they have the right to close down my account for any reason whatsoever – without any form of recourse – keep my money for 180 days – and there’s nothing that I can do about it. Well Paypal you on wrong about that because there’s a lot to do about it.
I am a person who values free speech and fights hard against censorship and the Corparations like eBay who owns PayPay who think they can come in and tell ME what I can say on the Internet. Well I say – fuck you PayPal! I will not only keep my right to FREE SPEECH but I will use that right to expose you for what you really are.
Now – for those of you who are reading this – you probably don’t entirely grasp the details of what I’m talking about. You think – this is PayPal – they have to be more ethical than that don’t they? I say – yes they do. So I called them on the phone about it to get them to explain it to me in their own words. And I RECORDED THE CONVERSTATION IN THIS MP3 FILE SO YOU ALL CAN HERE IT FOR YOURSELF!
First things first. The file you are listening to is edited. But the important content is unaltered. I removed about 20 minutes of on hold messages so that you wouldn’t have to sit through the wait time. The rest of it is everything that was said between me and PayPal.
What really fun about this is that I got them to say just exactly what they did to me and how they ripped me off and how they aren’t going to do anything to fix it. What you hear is a real life detailed experience that I had and what PayPal’s end user agreement really means to you – so that if you are thinking about doing business with PayPal – or you are already a PayPal or eBay customer – you might want to reread that user agreement and see if this is really what you want to be agreeing to.
In the recorded conversation – after getting them to plainly explain how they are screwing me – I anounce to them that I have recorded this phone call – and that I’m going to put it on the Internet. All of a sudden it is them flipping out and screaming about their rights – but – there’s nothing they can do about it. You see – I’m not the only one who has no choice. When I dialed up PayPal – the very first thing their machine said was, “This call may be recorded.” So – I recorded it. Listen to the squeal about their rights – but I don’t give a fuck about their rights because they don’t give a fuck about my rights.
The big corps think they hold all the cards – but there are things that we consumers can do to fight back. After all 0 this is a country of the people, by the people, and for the people. Not of big corporation who think they can enslave us and walk over us any time they want to. I want this web site to be a turtorial about how people like you and me can stand up to these motherfuckers and show them that the People rule. And we do that by taking money out of their pockets.
Now – there are plenty of other people out there with similar stories of being censored or otherwise ripped off be PayPal and the comment section is open for you to tell your PayPal story. Go ahead and put in links to other PayPay sucks sites and tell us who is better. It’s time that the online community organized to move away from unethical corporations like eBay who owns PayPal and find services who will play ball with us on OUR TERMS.
And – I want you to let PayPal know that you saw this web site and let them know what you think aboiut it. Here is an Email Form to tell them – you saw it hear – you listened to the recording – and what you think about it.
One think to keep in mind is – PayPal is not a bank – nor do you have the protection that banks offer. They are also not a credit card company. They act like they are a fiscal instution but Master Card and Visa aren’t playing moral police with me. And as you can see – if they decide to take your money – they just take it. Even if you transfer your money out of paypal the day before they close your account.
Also – if you are going to link to this page – don’t use the blog url. Use this URL instead:
http://paypal.ctyme.com/paypal/paypalsucks.htm
Here’s another PayPal Warning Site I found.
Other PayPal Sucks Sites:
http://www.paypalsucks.com/
http://www.internationalterrorist.com/paypal.html
http://yro.slashdot.org/yro/04/05/18/0128201.shtml?tid=126&tid=153&tid=172&tid=93&tid=95&tid=99
http://www.gnutellanews.com/article/12148
http://www.tcj.com/messboard/ubb/Forum1/HTML/007500.html
http://seclists.org/lists/politech/2003/Mar/0040.html
http://dir.salon.com/tech/feature/2001/02/23/pay_pal/index.html
http://www.whatreallyhappened.com/paypal.html
http://www.aboutpaypal.org/
http://groups.yahoo.com/group/paypalperil/
http://www.outofthedark.com/CorporateWars/PayPal/index.html
http://www.ygoodman.com/paypal.asp
What is PayPal?
PayPal is an online service that allows you to email money to other people.
———————-
Why is my account access limited?
Your account access has been limited for the following reason(s):
# Jun. 13, 2004: In accordance with PayPal’s User Agreement and Acceptable Use Policy, we have closed your account. Your funds may be held for 180 days from the date of your last transaction. After 180 days, you will be able to access your funds by requesting an online bank transfer or, if applicable, a check from PayPal. Please update your address or bank information as we cannot be held responsible for checks issued to an incorrect address. We do ask that you please remove reference(s) to PayPal from your site.
(Your case ID for this reason is PP-040-853-646.)
Posted by marc at June 13, 2004 07:59 PM | TrackBack
Comments
i feel for u mate.. i had my paypal account closed, and by the time i was able to come back to the civilized world to do anything,(was out in the outback) my money, my account all gone.The reason they gave me was inactivity on my account so they took it to themselves to close and wipe my money clean.Your reasons was more obsecure.. wat does an online content (what u write on the net) has anything to do with paypal?
screw them real good!
Posted by: ixnay at June 13, 2004 09:11 PM
Large corporations are all, repeat, all crooked. You will need a website the size of Siberia to contain all the “so and so sucks” information. Let me suggest:
CORPORATIONS SUCK
They are Re-animated Companies. They take a company that has been sold (aka dead) and artificially re-animate it with money from absentee stock-holders. These Frankenstein’s Monsters are ruling the world. Nice, huh?
They are evil incarnate. Whaddaya gonna do?
Posted by: Dancho at June 13, 2004 09:49 PM
the URL to the MP3 is 404, bro.
Drew
Posted by: drew niese at June 13, 2004 10:01 PM
As far as the reversal of transaction goes, I think you have a legitimate right to complain.
But I don’t think you can call foul as far as PayPal’s closing your account is concerned.
From the “User Agreement for PayPal Services”:
“This User Agreement (“Agreement”) is a contract between you and PayPal, Inc. and applies to your use of the PayPal