Paypal Withholding Funds to eBay Sellers for Up to 21 Days!   - 2,615 Views, 5 Comments

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.