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I urge any PayPal account holder to read this warning. Please spread the word.
PayPal claim to have a legal responsibility to restrict (freeze) premium
accounts without first giving prior notice. PayPal enforces the EU
Anti-fraud/Money laundering laws to justify its action claiming it is primarily
a consumer protection policy.
What Paypal will not tell you is the millions PayPal extract from accounts
issuing refund fees as a result of this action. I will come to this later.
This is how the system operates it comes in three parts. It is simple and
somewhat concerning.
For those contemplating opening a PayPal account the process is both simple yet
time consuming. To open a basic PayPal account you are required to fill in your
declaration using your credit card details. A small fee will be charged to your
credit card and this charge together with a code will be shown on your next
bank statement.
This code will be needed to open a PayPal account to prove your identity. In
order to withdraw funds from your Paypal account You will be need to upgrade to
a Premium Account. A fee will be charged and all incoming payments are subject
to a hefty percentage charge. Read the small print.
Simple so far, however the next event I am going to describe is a real event.
It is very recent and currently in the hands of UK solicitors. Any PayPal user
can be affected so please read on and be very cautious.
A long and trusted friend of mine is a victim. He is a victim of corporate
bullying and will be referred to as Mr X.
Mr X (Premium PayPal account holder) recently sold a number of items on
auction site Ebay. Unwisely he chose PayPal as his preferred payment method.
All items sold on Ebay were paid for using PayPal.
Four working days later Mr X receives an email from PayPal stating his premium
account is being restricted (frozen) and will not be able to withdraw funds.
What has happened??
PayPal employ a computerised data system which monitors account movements
experiencing a higher than usual trading activity. If your account has been
identified you will be sent an email stating the following:- Your account is
restricted. PayPal requires you to forward the following:- Passport, Drivers
Licence, Utility bills, Receipts and invoices for goods sold.
The question should be asked, why were these requests not made PRIOR to
upgrading to a Premium Account????? Any such matters regarding security and
identity should have been resolved DURING the process of upgrading accounts not
after.
What are the consequences should you happen to be out of the country and cannot
access or provide the documents required?? What if you are selling items
without receipts or invoices?? To my knowledge this is not considered a
criminal offence in the UK. Where does it state in UK banking law that
Receipts, Invoices etc are required prior you using the banks clearing
facility??
If this is a genuine attempt by PayPal to introduce a security backup system,
why not rely instead on the widely used and trusted Escrow service?? If the
buyer has doubts as to the sellers integrity the choice is obvious. Abstain
from bidding or insist on Escrow. This method ensures the buyer will receive
the goods as described protecting all parties concerned.
It should be pointed out PayPal do not receive a fee for Escrow. Read into this
what you will. The system currently used by PayPal is a Judge and Jury method.
You the seller have no rights to prove your case and are considered guilty and
treated according to the law of Paypal.
Under protest Mr X provided all the required identity documents including
Passport, Bank account Details/Statements and Utility bills.
The following day ( now the 5th working day ) Mr X receives an email from
PayPal requesting further information. All receipts and invoices for items
sold on Ebay were to be accounted for. Mr X explains he cannot provide the
documentation requested within the time alloted and with a block on his account
cannot pay Packing/Shipping costs/ ebay sellers fees or VAT. Pay Pal however
still insist on documentation.
Mr X now has two options. He can either postpone the delivery deadlines
promised to his customers or offer a full refund.
PayPal true to form could not offer a guaranteed date for the restrictions to
be lifted so Mr X made a decision to cut his losses and offer a full refund to
all his customers.
Simple!!!...Not on your life. Mr X cannot issue refunds, his accounts restrict
him to receiving funds only. Mr X consequently receives hate mail from his
customers. Ebay subsequently bans Mr X due to customer complaints of non
delivery.
Not only is Mr X substantially out of pocket he has lost hard earned business
credibility, his good name and reputation.
Who benefits from this fiasco??? Certainly not Mr X and his customers.
Ebay will of course collect its sellers fees and as for PayPal not only have
they charged Mr X exorbitant selling fees they are now charging Mr X customers
refund fees. Refunds usually take up to 10 days. So lets look at the evidence.
PayPal not only impose a percentage charge for depositing funds they also
charge a percentage to refund fees, whilst at the same time earning interest on
your money. You could not make this up.
For legal reasons my comments are somewhat restrained. However I do feel much
anger inside. How can so called reputable companies act with such impunity and
disregard to its customers.
I would be most grateful if anyone can contact me or this newsgroup to suggest
what actions could be taken. My friend is a broken man as a result of this
action and I desperately want to assist in any way I can.
Many thanks for reading.
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