A reader was banned from Paypal over 6 months ago and he had A LOT of money in the account when it was banned. Usually Paypal says you have to wait 6 months before you can withdraw the money and so that’s what he did. After the 6 months had passed, he tried to withdraw his money but his account was empty. Then he CFPB’ed them and got this back. I had to remove a lot of stuff (and the bolding is mine) since he’s going to take them to court.
On <ACCOUNT OPEN DATE>, you created a PayPal account (“Account”) at which time you agreed to PayPal’s user agreement (“User Agreement”) and PayPal’s Acceptable Use Policy (“AUP”). In order to prevent fraud and help ensure the safety of the PayPal system, PayPal routinely reviews account activity. On <SHUTDOWN>, we carefully considered a number of factors that, when viewed together, indicated there was a high level of risk associated with your Account. In particular, we found that you were accepting payments for counterfeit merchandise or merchandise that infringes on the Intellectual Property (“IP”) of others, which is activity prohibited under the AUP. Specifically, you received multiple payments via eBay for merchandise at prices significantly below fair market prices. For example, you sold multiple <WIDGET A> for X price , when similar items regularly retail for Y price. You also sold <WIDGET B> for Z price, when it retails for ZZ price. This selling activity violates the AUP, which provides that “You may not use the PayPal service for activities that…2. relate to transactions involving… (h) items that infringe or violate any copyright, trademark, right of publicity or privacy or any other proprietary right under the laws of any jurisdiction.” As a result, we permanently limited your Account as permitted under the Restricted Activities & Holds section of the User Agreement. We notified you of this action through email the same day. Pursuant to the Restricted Activities & Holds section of the User Agreement, “If you are a seller and you violate the Acceptable Use Policy, then… you will be liable to PayPal for the amount of PayPal’s damages caused by your violation of the Acceptable Use Policy. You acknowledge and agree that $2,500.00 U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal’s actual damages… PayPal may deduct such damages directly from any existing balance in any PayPal account you control.” Accordingly, and because you accepted payments into your Account for counterfeit merchandise in violation of the AUP, on <BAN DATE>, PayPal debited <ALL HIS MONEY> from your Account balance as recovery for its liquidated damages caused by the aforementioned AUP violations. You were notified of this via an entry in your PayPal transaction history stating, “PayPal’s damages caused by Acceptable use Policy Violation(s).”
I can tell you guys that one of the widgets commonly go on sale and I’m sure everyone has bought one, myself included. And I’m sure some of you have even resold it on Ebay, myself included. We sell it for more than our cost but below the normal non-sale price.
It took me a few minutes to realize that Paypal essentially took all his money, claiming he’s selling counterfeit items WITH ABSOLUTELY NO PROOF (they assumed he was due to his price vs the MSRP.) SHIT, if that’s the case, EVERY SELLER ON EBAY WOULD BE GUILTY OF THIS.
What % of items are sold for over MSRP on Ebay? Maybe 1% at most (it’d be new items that happened to be OOS on all retailers. You can’t sell normal items for MSRP on Ebay because people would just buy direct from Amazon, Best Buy, Walmart, etc. It makes no sense at all. Anyway, he’s going to try to take them to court / arbitration in hopes of getting his money.
The lesson learned out of all this – if you’re reselling items on Ebay and still getting paid via Paypal, you better withdraw your money out regularly so that Paypal doesn’t confiscate your money.
I’m guessing that you haven’t been on Ebay very long if you think folks don’t buy over MSRP/MAP. Maybe not often anymore on fixed price listings, but that’s the whole point of auctions. I used to wonder why buyers were too lazy to price research, then I just started taking their money and not worrying about it!
I try to be very careful with PP since my livelihood in some marketplaces depends on it. I know the hobby sellers are just looking for points grabs. It’s not fun to sell against sellers who don’t need to make a profit, but that’s the game.
Yeah, I’m an Ebay newb.https://milesperday.com/2015/05/pro-tips-from-15-years-of-reselling-on-ebay/
Just sue PayPal in small claims. Forget what it says about arbitration. etc. … just sue them.
This will force their lawyers to: either contact you to settle (which they WILL do) or come to court to explain to a judge how they know your items were counterfeit (which they will NOT do).
I’ve sued financial institutions 3 times in small claims and every time their lawyers called one week before they need to come to court to settle. All times they agreed with 100% of my settlement terms. Forget the CFB and all those other agencies … GO TO COURT.
Wait until he tries to take PP to arbitration. They updated their terms so now the consumer has to foot the bill for claims over 10k I believe.
And also pull all funds from the linked bank account since PP will try to suck out any funds that they can from any linked accounts. I have a PP buffer account specifically for this reason. They cannot be trusted.
Another data point of how terrible Paypal is.
But from the letter, it appears this is triggered by sales of “widgets” that were counterfeit.
Was that true? You don’t make it clear that the seller was actually innocent of that… You mention a lot of people reselling this, and about the pricing, but the specific widgets sold, were they counterfeit or not?
If they were, then PayPal does have the right to confiscate as the seller was selling counterfeit goods.
Read all the stuff below the block quote again. Why would anyone in this hobby sell counterfeit items?
Uh, because counterfeit products are a big issue on eBay… and I have been a recipient of such fake goods.
And it still doesn’t confirm whether the seller did or did not actually sell counterfeit items in the first place; which is the main reason stated by PayPal. Their supporting evidence is that the goods were below market rate. But again, the prime reason stated is that they were counterfeit.
Going back to the original question: were the items legit or not? You never clarified whether they were or were not in your original post. You support your point on just the fact that below market pricing is not a valid reason to withhold funds, yet you never state whether the items were in fact counterfeit or not.
I am no fan of PayPal, but I would also expect you to make a point about the legitimacy of the widgets before pointing out the poor supporting evidence.
THEY WERE NOT COUNTERFEIT!
Constructive Information: You should update your post so that it’s clear the widgets were not counterfeit in the first place before talking/complaining about how underpricing the market is not be a crime. All you offer is saying PayPal offered no proof; yet it doesn’t absolve the seller either that the items could be counterfeit.
Maybe you were too focused on the secondary point, but for someone reading what you wrote, the fact that you highlight COUNTERFEIT but make no mention that they were not makes people wonder if it is actually a legitimate reason why PayPal confiscated the funds.
Try to understand people trying to help you write more clear posts… instead of SHOUTING like someone who can’t have a civil discussion.
What part of this is hard to understand?
“I can tell you guys that one of the widgets commonly go on sale and I’m sure everyone has bought one, myself included. And I’m sure some of you have even resold it on Ebay, myself included. We sell it for more than our cost but below the normal non-sale price.
Where’s this proof that PayPal has that the items are counterfeit other than the lower than msrp selling price? AZ does this to their sellers too and they rarely have any proof beyond hearsay.
There is no proof. That’s the point. They assume you selling an item for below MSRP is counterfeit.
How to CFPB PayPal?
Holy Nikes! PP shut me down as well. But the over reach here is disturbing and scary