Paypal Withholding Funds to eBay Sellers for Up to 21 Days! - 5,676 Views, 8 Comments

Summary: This is a classic example of the problem when one entity with too much control owns the entire sales stream - from start to end - from offer to sale to payment: Paypal has started withholding payments that buyers have already paid until the seller not only ships the item, but "as long as the buyer doesn't report a problem or leaves positive feedback"! "Your funds are pending - please process this order" demands the notice from Paypal "...This money is being temporarily held in your pending balance... It will be held for up to 21 days... It may be available sooner if we can confirm that the item was delivered or, if this is an eBay item, your buyer leaves positive feedback."
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This is a classic example of the problem when one entity with too much control owns the entire sales stream - from start to end - from offer to sale to payment: Paypal has started withholding payments that buyers have already paid until the seller not only ships the item, but “as long as the buyer doesn’t report a problem or leaves positive feedback”! “Your funds are pending - please process this order” demands the notice from Paypal “…This money is being temporarily held in your pending balance… It will be held for up to 21 days… It may be available sooner if we can confirm that the item was delivered or, if this is an eBay item, your buyer leaves positive feedback.”

The full notice reads:

Your funds are pending - please process this order

You received a payment from {name of Buyer}

This money is being temporarily held in your pending balance. It will be held for up to 21 days. While it’s being held, it won’t be available for withdrawal.

We’ll move the money to your available balance after 21 days as long as your buyer hasn’t reported a problem. It may be available sooner if we can confirm that the item was delivered or, if this is an eBay item, your buyer leaves positive feedback.

To get access to this money more quickly, please process this order right away and communicate with your customers early and often.

{Payment details omitted}

We recommend that you:
Log in and go to the Transaction Details page to see if you’re eligible for seller protection on this payment
Ship to the buyer’s address on the Transaction Details page
Use a shipping service that offers signature confirmation
Save all tracking information or other proof of shipment
Let your buyer know their item shipped by adding tracking information on the Transaction Details page

Thanks,

PayPal

In the meantime of course, the seller does not even have the funds available to them to pay for shipping! And what if the buyer decides to complain or say that they never received the item, or just decides to leave negative feedback - with the intent that the funds never get released to the seller?

We’re not sure exactly when eBay / PayPal started pulling this stunt - which, it must be noted, lines their pockets as they collect the interest on your money for a cool 21 days - but it came to our attention yesterday afternoon. Research indicates that it has been going on at least sporadically since last month, and why there hasn’t been more of an outcry is beyond us.

We smell class action lawsuit here - both over the monopolistic control that Paypal / eBay not only has but is now exerting over their users, and over that small matter of interest accrued on the withheld funds, which may amount to only a few dollars for the hapless seller, but will undoubtedly amount to millions for Paypal.

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8 Comments »

The message forums on Paypal are swarming with this - people are livid. And they are saying that if you complain to PayPal or make a stink, your account freezes all together.

Comment by Jess — 12/18/2009 @ 9:47 am
this little paypal scam goes well back before e-bay bought them, and is the reason i will not deal through paypal in any way, as a buyer or seller, or buy from anyone who’s only payment option is paypal.

Comment by "gunner" — 12/25/2009 @ 11:23 am
21 Days?!! I wish PayPal holds 10% of my money for 90 days…. And for no reason whatsoever. I am a very good customer!!!! Holding my money is completely unjustified…. I gas I’ll have to take my business elsewhere… Google Checkout seems as a very nice place.

Comment by Scott — 1/28/2010 @ 11:41 pm
GOOD PLAN only if it worked! ebay Buyers like me pay upfront, contact Sellers. then too often have to wait and wait for replies and shipping. They don’t notify if delayed, and then get into s twist, send insulting messages when asked about item delivery! But they all think they deserve 5* ratings and damn the Buyer for not giving 100% 5*

Comment by Disgusted Buyer — 2/12/2010 @ 10:49 pm
That’s 5 star right!!!!! That’s how it is with a lot of sellers! We pay you fast and YOU make us WAIT in the dark after we paid!! To those whining sellers, I say: how does it feel to WAIT for paypal and not have a clue of what to expect??!!! Get YOUR act together and you’ll get the BUYERS money owed to you through paypal faster!!!

Comment by LIVID BUYER — 2/14/2010 @ 1:22 pm
Paypal is holding moneu from 8 of my buyers! Since I have no money to ship their items, THE BUYERS are not going to get their items. OR THEIR MONEY! Paypal is withholding any refunds, as well! What do you “disgusted buyers” think about it? Do you think that they should be able to hold YOUR MONEY! I have 100% positive feedback, eamil to my customers when items ships and send tracking numbers. They have no reason to freeze my account, but they did anyway. Now people who bid and won the items can’t get the item or their money back for 21 days! Oh yeah! That really screws THE SELLERS! Dugh!!! The buyers are ALSO the being screwed
by paypal. WAKE-UP PEOPLE!

Comment by Patty — 4/24/2010 @ 6:54 pm
“Livid” starts to sum it up but still doesn’t cover the anger I have about this issue. I received my “notice” about this early this morning. I have called PayPal and emailed them. Here is my beef: I don’t sell anything on eBay. My PayPal account is strictly business. I am paid for services rendered. And still they tell me that they will be holding all my funds for up to 21 days - even tho the transactions has nothing to do with eBay whatsoever! Luckily the funds in there now are free up until this morning. I am transferring that money out and thinking about shutting my PayPal account down all together. This is just another way for PayPal to make money off our money from interest! I am contacting anybody and everybody that I know that uses PayPal to warn them. PayPal is going to loose alot of business because of this screw ball they threw!

Comment by Paul R — 5/3/2010 @ 8:28 am
Paypal are bloody corrupt and a bunch of thieves! something really needs to be done about them!

Comment by foxcub — 7/24/2010 @ 3:05 pm