you must read eCommerce auctionbytes letters to editor ... re; Paypal holding $

We’ve all heard the horror stories about PayPal’s user agreement.

Let’s take a moment to look at pertinent sections of the user agreements from PayPal, Amazon and Google.

From the Amazon user agreement:

6.2 Seller Accounts. Subject to restrictions described in this Agreement, we will automatically disburse to your bank account funds for a transaction submitted to us fourteen (14) days after the first business day on which the transaction is completed and to the extent we have received payment (less any fees due). Payments will be made only to an ACH-enabled bank account located in the United States that you register with us.

6.3 Availability of Funds. In addition to any applicable account limits, we may restrict transactions to or from your Payment Account or limit access to funds in your Payment Account in such amounts and for such time as we reasonably deem necessary to protect us or other users if: (a) we are subject to financial risk, (b) you have violated any term of this Agreement, © any dispute exists involving your Payment Account or transaction to which you are a party, or (d) needed to protect the security of our systems. We may restrict access to funds in your Payment Account for the time that it takes for us to complete any pending investigation or resolve a pending dispute. We also may hold your funds as required by law or court order or if otherwise requested by law enforcement or any governmental entity.

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From the Google terms of service:

6.4 Reserve. GPC reserves the right to withhold a portion of the proceeds that are payable to Seller with respect to the processing of Payment Transactions (a “Reserve”) to help ensure that sufficient funds are available to GPC in the event of chargebacks, reversals and other liabilities related to Seller’s use of the Service. Circumstances where GPC may impose a Reserve include, but are not limited to: (a) adverse changes in Seller’s financial condition or its payment record with creditors; (b) excessive rate of chargebacks, reversals, or Buyer support issues; or © significant changes in the nature of Seller’s business or product lines. GPC is not responsible for any losses sustained by Seller as a result of the imposition of a Reserve.

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From PayPal’s user agreement:

10.4 Actions by PayPal – Holds.

a. Risk-Based Holds. PayPal, in its sole discretion, may place a hold on any or all of the payments you receive when PayPal believes there may be a high level of risk associated with you, your Account, or any or all of your transactions. PayPal’s determination may be based on a number of different factors and PayPal may rely on information it receives from its third party partners such as eBay. If PayPal places a hold on a payment, the funds will appear in your “Pending Balance” and the payment status will show as “Completed – Funds not yet available”. If PayPal places a hold on any or all of the payments you receive PayPal will provide you with notice of our actions. PayPal will release the hold on any payment after 21 Days from the date the payment was received into your Account unless you receive a Dispute, Claim, Chargeback, or Reversal or PayPal has taken another action permitted under this Section 10. PayPal, in its sole discretion, may release the hold earlier under certain circumstances, for example PayPal may release the hold earlier if you have uploaded tracking information. If you receive a Dispute, Claim, Chargeback, or Reversal, PayPal may continue holding the payment in your Account until the matter is resolved pursuant to this Agreement. b. Disputed Transaction Holds. If a User files a Dispute, Claim, Chargeback or Reversal on a payment you received, PayPal may place a temporary hold on the funds in your Account to cover the amount of the liability. If you win the dispute or the transaction is eligible for PayPal Seller protection, PayPal will lift the temporary hold. If you lose the dispute, PayPal will remove the funds from your Account. This process also applies to claims that a buyer files directly with eBay through the eBay resolution process if your Account is your reimbursement method for buyer claims.

10.5 Actions by PayPal – Reserves. PayPal, in its sole discretion, may place a Reserve on funds held in your Premier or Business Account when PayPal believes there may be a high level of risk associated with your Account. If PayPal places a Reserve on funds in your Account, they will be shown as “pending” in your PayPal Balance. If your Account is subject to a Reserve, PayPal will provide you with notice specifying the terms of the Reserve. The terms may require that a certain percentage of the amounts received into your Account are held for a certain period of time, or that a certain amount of money is held in reserve, or anything else that PayPal determines is necessary to protect against the risk associated with your Account. PayPal may change the terms of the Reserve at any time by providing you with notice of the new terms.

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Amazon’s Section 6.2 indicates they routinely hold your money for a minimum of 14 days no matter what…

Amazon’s Section 6.3 gives them the right to hold your money indefinitely for whatever reason they see fit…

Google’s Section 6.4 gives them the right to impose a reserve against your account whenever they choose to do so…

PayPal’s Section 10.4 & 10.5 give them the right to impose holds and reserves against your account for whatever reason they choose…

Seems to me all three services (PayPal, Amazon and Google) reserve the right to hold your funds for extended periods for whatever reason they wish if they choose to, and none of them are angels (or demons, for that matter)—simply businesses with slightly different ways of doing business)…

PayPal at least offers 2 things the others don’t:

1.)A telephone number that you can call to speak to a real human being who is quite often able to help you when you have a problem.

2.)A debit card which allows you access to your account balance immediately without waiting for a bank transfer.

I think each seller has to make the decisions they feel are best for their own business. They Just need to be sure they are making a business decision and not an emotional decision.

To add to what Bearcat said, another two things PayPal offers that the other two don’t are:

• More control over your own funds. You can opt to transfer them to your bank account right away or keep them in your PP account.
• The option to use the funds in your PP account to pay for things where PP is accepted.

As for holding funds, I’ve said it several times before and will just keep saying it, check with your State Attorney General’s (SAG) office to find out whether or not they have a law regulating how long a money transmitting service can hold your money. If so, ask what that time limit is. In Texas, it’s 10 days.

Whether or not you’ve ever had a problem with funds being held, I would mention it to your SAG about it being a common practice of PayPal’s to hold funds without giving a reason, even when asked. If they do give a reason, it usually doesn’t apply to the transaction in question. So, either they’re lying, withholding information you’re unaware of, or both, and you could ask your SAG for advice on how to handle it.

Of course, if you HAVE had a problem, currently or in the past, I would discuss that with your SAG and see if you have any recourse. In my dealings with two different SAGs on different issues, they’ve always given me legal advice and have requested documentation with a letter explaining my problem. I have always gotten fast results without ever having to do anything else.

@Chicago…Do you have multiple stores already attached to Google and Amazon? It is my understanding that Google and Amazon are the ones who only allow one site to be attached to an account. Please correct me if I’m wrong.

Yeah, really…let’s all suck America dry, shall we?

It just baffles me why so many sellers are having so much trouble with Paypal. I have been with Paypal for 12 years and never had a problem with them. I have never had my funds withheld for a certain length of time and have from the very beginning, after being approved had control over my own funds and received my monies in a timely manner. In all the years of selling and using Paypal, I only had one dispute with a buyer, Paypal did their homework and I won the dispute. The buyer was a pro at saying “She did not authorize the purchase”, after she gives me a super great feedback. Of course, I had all my cards in order, submitted everything to Paypal, they checked her out and found out she was a con artist that had done this several times before. All over a $14.95 item.

Paypal has been very professional with me and my account, so I just have such a hard time understanding why all these things are happening to sellers.

Have been with Google off and on for many years, and there too, I have never had a problem. Never held my funds after being approved. Amazon is the only one that holds funds, and I cannot for the life of me figure out how they can get by with what they do in paying the seller. It is truly a nightmare to say the least, trying to figure out their payment methods. So, regardless of what I read, I will stay with Paypal. At least I still have control over my own funds.

decoratewithlace's booth

This is why I have a merchant account.

Do your homework regarding a merchant account. My day job boss pays quite a bit for the privelege regardless of getting a sale or not. Monthly fees can getcha good.

G's New-N-Used

Yes I have been with the merchant account – they work a little differently here in Australia. Still a bit of homework to do.

Cannot get PP debit cards here – don’t think I would want one.

Jules

For Everything Nice

In my opinion PP is the lesser of all the evils of on line payment processors. While I’m not a lover of PP, I like them better than I do Amazon which demands that new sellers signed up through them have something like a total of 100 transactions or a time frame that’s a lot longer than PP does.

If I were to sign up at Amazon with the sales I HAVEN’T been having, I’d be under their probationary period and have my money held by them for a year or more.
No thanks
If anyones going to hold my money, it better be me !!!

And Iris is right. A lot of these companies count on us not knowing that they are doing something wrong, and they also count on us NOT doing anything about it.

Every state has rules as to how long these companies can hold funds. Contact your local State department that takes care of this and ask questions about what’s allowed.
It costs you nothing but a phone call and a bit of time. And if more folks stood up to companies like PayPal and got them smacked with big fines by various states, then I’d bet they’d quit trying to rip folks off

RAYVEN'S RARITIES'

“It is required to become compliant with State laws after the Attorney General takes action against its behaviors to sellers.”

Well, it’s required regardless of whether the SAG takes action. The difference is that PP would be put on notice by the SAG — comply with state laws or they cannot do business in that state. That’s why I keep trying to encourage peeps to contact their SAG — it will get PP to remedy the situation real quick. Not just for you, but everyone else in your state, too, because PP knows your SAG’s eyes are on them.

Even if your state doesn’t currently have any laws protecting businesses and consumers, your SAG will be made aware that action needs to be taken, which will lead to laws being enacted to protect you. What happens if you say nothing? Well, usually nothing. So stop waiting for someone else to say it for you because your SAG can’t help you if they’re not made aware.