PayPal blocks and holds funds for up to 180 days. This was previously also known because customers can open a buyer protection case. All understandable - However, more and more merchants, especially small businesses, are complaining that their money "is being debited to PayPal" just before these 180 days. The customer does not receive an email.
The PayPal Acceptable Use Policy
Like any business, bank, or service provider, PayPal has “Acceptable Use Policy”. In short, these are the “rules of the game” to be followed on the PayPal platform. Otherwise there is a risk of account limitation (also known as "restriction"). Then the tragedy begins: Funds are frozen and made inaccessible for up to 180 days. Although PayPal is considered a bank in the EU, PayPal violates any laws here.
For example, anyone who trades illegal items or sells other things that violate PayPal's usage guidelines is acting illegally and can be blocked. It happened to us too, the story you can find here.
Shortly before 180 days: Money simply debited to PayPal
Many (former) PayPal customers complain that they never received their money. But can PayPal just do that?
The answer is: According to their usage guidelines, yes! It says the following under the point: “Prohibited Activities, Retentions and Liquidated Damages”:
acknowledge that USD 2,500 (or the equivalent in the currency of your country of residence) per breach of the Acceptable Use Policy:
- represent a reasonable minimum estimate of our actual loss, taking into account all of the current circumstances, including the ratio of the amount to the extent of the loss that could reasonably be expected. This applies in particular to the internal administration costs incurred by PayPal for monitoring and prosecuting violations, the damage to PayPal's brand and reputation, and the contractual penalties imposed on PayPal by its business partners as a result of violations by users.
- are reasonable and proportionate to the performance of the PayPal Services on your behalf, and
- necessary but no more than sufficient for our legitimate interests in compliance Acceptable Use Policy to protect.
we can deduct such damages directly from your PayPal balance.
You can find the usage guidelines here: https://www.paypal.com/de/webapps/mpp/ua/useragreement-full
Does PayPal really do that? Yes!
You might think that as a bank/payment service provider, PayPal is safe and you can store money there. However, we advise you to exercise extreme caution and transfer your money to a German bank account. Because in many cases PayPal has actually already collected funds, as illustrated in this case:
A total of 7,297 $ (approx. 6,726 €) were transferred to PayPal - you would have agreed to the usage guidelines. And there are even more pivotal cases where PayPal has taken even more money. This transfer memo says "Damage to PayPal caused by violating the Acceptable Use Policy"
The question is: is this legal? Maybe a lawyer can be consulted here, in our opinion this is not legal (even if it is in a usage policy)
That's what PayPal says about it
PayPal uses the following text again and again to justify this (e.g. to lawyers or bank regulators):
Wales. Based on the above facts, we believe that PayPal in
acted under the Acceptable Use Policy (AUP) in accordance with English law,
by restricting the account and debiting the account balance to
Recover damages related to PayPal Acceptable Use Policy (AUP) violations.
In relation to the deducted damages, we would also like to point this out
subject to the enforceability of clauses over flat rate
compensation recognized. We understand that protecting your reputation is one
party and the integrity of the entire commercial system they
operates are recognized as having legitimate interests worth pursuing
such clauses to be protected.
In addition to protecting the general integrity of the payment system itself
the PayPal Acceptable Use Policy (AUP) PayPal's legitimate interest
protect and ensure that the actions of their customers do not (under
other) are exposed to the following risks:
Criminal Liability on a Secondary or Incidental Basis. In
some jurisdictions where PayPal does business, the
criminal liability attached to payment processors on an ancillary basis
be whose service was put into use by those who
ultimately responsible for committing a crime.
• Direct criminal liability under law or
Regulations, such as those relating to the prevention of
obtain money laundering.
• Civil liability for claims brought by
Consumers using those customers' services versus customers
are asserted by PayPal, e.g. B. if these consumers
claim that the customer of PayPal is a fraudulent system
operated that PayPal should have known about.
Civil liability for fines, penalties or other costs incurred
by PayPal's banking partners, such as Mastercard and Visa
PayPal will be charged if they are unlawful or
enable brand-damaging transactions that go against your own
violating the policies of these banking partners
• damage to the reputation and goodwill of PayPal,
if as a result of this sales will be facilitated by persons who are at
engage in activities that PayPal deems illegal
We understand that English law recognizes that maintaining the
integrity of the entire commercial system is a legitimate interest that it
is worthy of being protected by liquidated damages clauses.
PayPal incurs significant costs for monitoring and controlling
transactions carried out to ensure that these in the various
Jurisdictions are lawful and consistent with the PayPal User Agreement
to match. Ultimately, all of the costs associated with PayPal
Regulatory compliance and the enforcement of the PayPal Acceptable Use Policy (AUP) by various internal departments
necessary to ensure the integrity of PayPal's entire commercial system
and therefore reflect a legitimate interest pursued by
liquidated damages is adequately protected. (...)"
We wonder: Which German (or European) bank would ever embezzle money from customers or use it to enrich themselves?
Money was deducted from you with "PayPal AUP damage"? You can do that
If PayPal has withdrawn your money, you can get help. You can easily contact the following places:
- Write a complaint to [email protected] (to Timothy Minall) requesting a refund. Give a deadline of 30 days.
- PayPal's response, if you don't get your money back, send to [email protected] (the regulator that oversees PayPal)
- You can get more information here: https://aupdamages.com/
- If you have any further legal questions, be sure to consult an attorney