Legal Question in Business Law in California

Paypal has frozen my accounts

In September 2000, I sold an item on eBay for $500 and collected funds through Paypal. After receiving funds and depositing into my bank account, I received an e-mail indicating that I had been paid with fraudulent funds and the $500 was immediately taken out of my paypal account, resulting in a negative $500 balance. I provided shipping information to verify that I had shipped the item to support the seller protection policy that I was covered under. Unfortunately, Paypal did not credit my account and I did not receive any contact from them until I tried to sell items again on eBay in November 2006. I have contacted Paypal by phone and e-mail on numerous occasions with no response. I began selling items on another account in 2006 and Paypal has frozen nearly $1,800 in other accounts until I resolve the negative $500 balance. It has been over 6 years since the incident, am I still liable considering that Paypal never contacted me since the incident?


Asked on 3/04/07, 6:18 pm

3 Answers from Attorneys
Timothy J. Walton Internet Attorney

Re: Paypal has frozen my accounts

Maybe I am not understanding your question, but it seems to me as if you want PayPal to give you money that was owed by the buyer. Why would PayPal have to do that? You chose to trust the buyer.

PayPal did not accuse you of failing to ship the items. PayPal has said that you never really got paid, because the buyer stiffed you. Your issue is with the buyer, and the statute of limitations means that you are on the hook for the $500, not PayPal.

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Answered on 3/05/07, 1:10 pm
Terry A. Nelson Nelson & Lawless

Re: Paypal has frozen my accounts

Welcome to the tyranny of PayPal. There are no easy solutions to your problem, and a lawyer can only help to a limited degree. But, consult with one about the details, and be prepared to file legal action in an appropriate court if he advises that you have grounds to do so. Feel free to contact me.

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Answered on 3/05/07, 3:50 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Paypal has frozen my accounts

Perhaps not "liable" in a strict legal sense, since you would perhaps have the benefit of a statute of limitations defense. However, PayPal is not suspending you based on legal liability, but rather on a policy basis. If you want to do business with them, you have to follow their rules, which may be a lot more stringent than the rules of ordinary contract and collections law.

Nevertheless, it does seem to me that you are being treated unfairly, and that you are entitled to a response. I suggest sending them a certified letter, addressed to a corporate officer or to their law department.

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Answered on 3/04/07, 7:31 pm


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