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Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
May I ask what reason Paypal has given for freezing your account please? Is it to carry out money laundering checks or another reason?
Have they given a timeframe for resolution of any investigation?
No its simply they say we have grown too fast and they are trying to limit their risk. I have said to them we need access to some of the funds to purchase stock to keep customers happy, etc and they are not budging. They also said due to some customer complaints they have had this is also a reason. the reason there have been customer complaints is simply due to the fact we can't get stock in to satisfy customers orders due to cash flow as they are sitting on over 100k of payments. they said they will review it again in a month
Thanks. Are you selling primarily on Ebay or on another platform?
we have our own websites
PayPal is a private business and as such is able to impose such reasonable regulations and procedures as they think reasonably fit in order to manage risk and operate their business. That said, but does not entitle them to simply hold a lien over your money held in their account.
In order to do so they must give detailed reasons and keep no more than is necessary to cover what they can justify as genuine risk - e.g. the risk of chargebacks against your account.
so what would you recommend as a course of action?
The first step is therefore to make a formal complaint to the complaints department - you may have already done this. Paypal is required to have a complaints process and is required to follow it. They must provide you with a written response to your complaint within the time frame provided for in the complaints process. If you are not satisfied with their response you may consider escalating it. There are two options for doing so:
if your business has an annual turnover of less than €2 million and fewer than ten employees, you are eligible to refer your complaint to the financial ombudsman service. PayPal is a member of the financial ombudsman resolution scheme and is therefore bound by the ombudsman's determinations. The financial ombudsman offers a free service to small businesses that satisfy the above criteria. You are not bound by the ombudsman's decision and can elect to go to court should you not be satisfied with their termination
the alternative is that you collect to sue in court for the money that is being held. generally, if you are eligible to use the ombudsman service, this is a worthwhile step because there are no costs or risk.
the difficulty of course in particular, is in relation to cash flow as whilst either of the above options are likely to succeed, they will both take some time and in the meantime, your business may suffer difficulties in respect of cash flow. Assuming this is the case, in your initial complaint, you may wish to draw this to PayPal's attention and reserve your rights to claim compensation for lost revenue in respect of what you consider to be unreasonable behaviour.
in terms of addressing cash flow, you may be able to agree credit facilities with the bank on the basis of your frozen credit balance held with Paypal and seek to recover costs of the green credit facilities fro Paypal on the above same basis
many thanks for the advice, we will follow that through
A pleasure. going forward, if you are increasing in size, you may wish to seek an alternative payments processor which is better set up for medium and upwards companies such as Worldpay for example.
such organisations did exclusively with commercial entities rather than PayPal which bases a great deal of its business model on small individual traders and small companies.
*such organisations deal exclusively...
we do use a merchant for credit and debit card,this is just paypal we are talking about,but thank you.
account managers are assigned which manage the account according to your trading profile which should help to avoid the majority of problems that businesses can experience with high-volume trade on PayPal.
A pleasure. If I can assist any further as the situation develops please do not hesitate to revert to me
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will do,thanks again. just want to keep my business,thats all.
I wish you well with your complaint