When Noah Thomas’ PayPal account is frozen, he loses $180 in gift cards. Can the company just keep the money?
Question: I recently had two eBay gift cards (one for $90, one for $87) withheld by PayPal/eBay. eBay gift cards are linked to a PayPal account. The PayPal account that these gift cards were linked to is now permanently limited, rendering the gift cards useless.
PayPal often bans accounts that look like they might pose any sort of risk. They were skeptical of a transaction that was made on my account at an ATM, and even after I provided information on this transaction, they denied all appeals.
I have just accepted that PayPal won’t restore my account. That’s fine. What bugs me the most is the fact that PayPal has taken almost $180 in gift cards from me. I have tried calling eBay and PayPal, but both companies transfer me to each other, essentially just wasting my time. I have also emailed higher up the food chain in both companies about this issue, with no response. I list the on my consumer advocacy site.
I have tried everything I can. I have thoroughly read through both companies’ Terms of Service, where nothing about this issue is discussed. I have considered talking to a lawyer, but the amount of money isn’t large enough for me to justify that.
I hope to eventually use my two gift cards. I understand that my PayPal account may never be recoverable, but it is not legal or fair to withhold my gift cards indefinitely. I just want my money. — Noah Thomas, Nashville
Answer: PayPal shouldn’t have pocketed your money. It may have correctly flagged the ATM transaction, but that doesn’t mean it can simply keep the money in your account.
Or does it? I checked PayPal’s novel-length user agreement. Sure enough, it appears to reserve the right to do exactly what it did: If you are engaged in any “restricted” activity, PayPal may, at its “sole” discretion, “close, suspend, or limit your access to your Account or the PayPal Services (such as limiting access to any of your Payment Methods, and/or your ability to send money, make withdrawals, or remove financial Information).”
Lesson learned? PayPal is not a bank. Its fees are high and its terms are, for some users, unreasonable. What’s more, PayPal’s “sole discretion” may mean that it doesn’t give you the time of day when it shutters your account.
This is not an isolated incident. I’ve dealt with numerous PayPal cases where accounts were closed with vague justifications — or none at all. You had the rare treat of getting stuck between eBay, which used to own PayPal, and PayPal itself, with both companies pushing the blame onto other. Talk about corporate confusion.
Someone at PayPal should have owned your problem. I mean, even though the company can keep your money doesn’t mean it’s the right thing. Although I imagine there are lawyers reading this story who will tell me that actually, it is. I refuse to get drawn into that argument.