Getting banned from PayPal is the worst nightmare for e-Commerce business owners.
The internet is replete with saddening stories of merchants banned from PayPal due to excessive disputes.
Here’s one case study my company culled from the PayPal Community platform:
“PayPal has banned my account permanently and holds $1900 for 180 days before I can get it back. I sold memorabilia to somebody in person a couple of months ago. The client asked if they could pay me with PayPal, and I said yes. Two days later, [the client] purchased something else under the same conditions. One day, weeks later, I received a message that he opened a case with PayPal saying I never shipped his goods. I explained to PayPal that this was an in-person transaction.
He also reported to his card company. I’ve been using paying for years and have done hundreds of transactions, so I assumed they would treat me well. You cannot reach anyone on the phone because of the pandemic, but they started calling me to collect my negative balance every day. I needed to do an outgoing transaction on PayPal, so I transferred the money into the account that was in the negative and $1900 for my transaction; after getting off the phone with PayPal collections and them assuring me I would have access to my money.
They held the money for three days before permanently banning me and telling me I can’t get my money for 180 days. Now I am out of memorabilia, the money I was paid for it, and an extra $1900 is on hold for 180 days.”
The above is not an exceptional case of someone that was banned from PayPal due to excessive dispute. There are very many other similar instances.
But as you would’ve also guessed, there’s always another side to every story. In this post, we shall examine why you can be banned from PayPal and how to deal with it.
Things that can get you banned from PayPal
PayPal has outlined various actions or business practices that could land you in trouble on their platform. Below are is a quick listicle of things that could get you banned.
1 – Your PayPal account has excessive disputes and chargebacks.
The first and the most apparent reason you can be banned from PayPal is when your account has excessive PayPal disputes and chargebacks. In this case, PayPal will temporarily freeze your account to investigate the dispute, preventing you from withdrawing, sending, or receiving money.
According to the company, having limitations in your account does not necessarily mean that you’ve done anything wrong. But it’s a way to help protect both the buyer and the seller. However, this can result in a permanent ban if they deem it fit. And yes, they can do that according to their User Agreement, which states thus:
“PayPal, in its sole discretion, reserves the right to terminate this Agreement, access to its website, or access to the PayPal Services for any reason and at any time upon notice to you and payment to you of any unrestricted funds held in your Balance.”
Here’s another story from the streets:
“I’ve had a VIP account for 12 years but suddenly got banned for life without warning. I spoke to lots of (quite helpful) people at PayPal who seemed as baffled as me. Finally spoke to someone in the US who said I’d received a payment from a client ten months ago who was under investigation for something they couldn’t tell me, and therefore I was banned for life to ‘shut down the chain.’”
2 – You violated PayPal’s Acceptable Use Policy.
Apart from excessive chargebacks and PayPal disputes, other serious issues can result in your being banned from PayPal.
According to PayPal, these reasons include activities that:
- Violate any law, statute, ordinance, or regulation.
- Relate to transactions involving (a) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, (b) drug paraphernalia, (c) cigarettes, (d) items that encourage, promote, facilitate or instruct others to engage in illegal activity, (e) stolen goods including digital and virtual goods, (f) the promotion of hate, violence, racial or other forms of intolerance that are discriminatory or the financial exploitation of a crime, (g) items that are considered obscene, (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, (i) certain sexually oriented materials or services, (j) ammunition, firearms, or certain firearm parts or accessories, or (k) certain weapons or knives regulated under applicable law.
- Relate to transactions that (a) show the personal information of third parties in violation of applicable law, (b) support pyramid or Ponzi schemes, matrix programs, other “get rich quick” schemes, or certain multi-level marketing programs, (c) are associated with purchases of annuities or lottery contracts, lay-away systems, off-shore banking or transactions to finance or refinance debts funded by a credit card, (d) are for the sale of certain items before the seller has control or possession of the item, (e) are by payment processors to collect payments on behalf of merchants, (f) are associated with the sale of traveler’s checks or money orders, (h)involve currency exchanges or check cashing businesses, (i) involve certain credit repair, debt settlement services, credit transactions or insurance activities, or (k) include offering or receiving payments for bribery or corruption.
- Involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent.
How can you avoid getting banned from PayPal?
Looking at the case studies above, it’s wise to do everything you can to avoid getting banned from PayPal.
The software leverages artificial intelligence and machine learning to recognize when a dispute on a payment occurs, and fight those PayPal disputes and chargebacks as you’d wish.
This post was first published here.