PayPal Preparing To Address Frozen Funds Policy

First time accepted submitter skywire writes "After years of forcing innocent customers to navigate a Kafkaesque process to unfreeze their funds, PayPal has announced that they are preparing major changes to alleviate the pain. From the article: 'The company routinely freezes funds for 21 days if it thinks there's a fraud risk, and its terms give it the right to extend the freeze for up to 180 days. To get access to their money, users are often asked to provide the kind of documentation that a product seller would have, like several months' worth of sales records. But if you're running a fundraiser or selling tickets to an upcoming conference, you don't have that paperwork. Even for those with extensive paper trails, the appeals process can take months to resolve. The Web is filled with enraged blog posts, websites like paypalsucks.com, and a Tumblr called "Conferences Burned by PayPal."'"

Comments

Square

[TechyImmigrant]

Maybe they're feeling the heat of competition from square and feel the need to do something to stop the exodus.

Our little business finds square a lot easier to deal with.

Too late for us

[tipo159]

I am involved with organizing a sporting event. This last year was our seventh running of the event. In previous years, the sanctioning body would collect the entry fee and send the events their portion. Because of some issues with the sanctioning body (not really set-up for credit card payment and slow payment to events), the system was switched to where events collected the entry fee.

We decided to go with PayPal for most of the normal reasons folks go with PayPal. I had the PayPal-based payment system up on the event web site in a couple of hours. The first month of getting entry fee payments went fine and we could transfer the funds into the event's bank accounts (to cover pre-event costs like venue deposits and insurance).

The trouble started at the end of the early entry period for the event (when entry fees increased). To avoid the increase in entry fees, almost everyone entered in the event who had not already done so, paid their entry fee on the same day. This triggered PayPal's fraud system and the event's PayPal account was locked. Although we had successfully run the event for the six prior years (with outside media coverage to prove it) and our paperwork was in order, PayPal decided that they would not give us access to the funds until after the event had run, "just in case the event was cancelled and the entry fees needed to be refunded".

PayPal's actions were almost a self-fulfilling prophesy. Without access to the funds to cover pre-event costs, the event was almost cancelled. Luckily, between the entry fees collected before the PayPal account was locked, the entry fees that we collected directly after the account was locked and understanding vendors, we were able to cover the pre-event costs and the event was held.

After successfully running the event, we contacted PayPal to get the account unlocked. At first, they wanted to make us wait six weeks. However, we pressed the point that we had bills that had to be paid and needed access to the funds ASAP. After an hour on the phone, they unlocked the funds and gave us access to the funds.

Compared to some people that I have spoken with, we got off easy.

I don't care what PayPal's new policy is. We are not putting our event at risk again by accepting payment via PayPal.