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PayPal destroyed my business of 8 years in a day

I built up a business on eBay over a period of 8 years. It grew to the point where I had a an e-commerce Webpage and gross sales volume of very close to $1,000,000 per year. I used PayPal’s “Website Payments Pro” to handle my transactions. I had 99% Positive Feedback on eBay and a Chargeback rate of less than a half a percentage point (well within industry standards) and these few chargebacks were the result of fraudsters using stolen credit cards to order from me (in other words, I was the one that lost money from them). All of a sudden, I got a call from a “Ms. Stacy Stewart” of eBay’s new Merchant Risk department (or some such department). She announced that they were going to take $30,000 of MY MONEY and put it aside in a holding account permanently (though they said they would increase the amount any time they wanted to). When I told her I didn’t have $30,000 for them to take, she said, “No problem. We’ll just take 5% of your gross sales volume at the end of each day and set it aside until you have $30,000 in your new holding account.” When I pointed out to her that my net profit on each sale was less than 5%, and I would therefore LOSE MONEY on each transaction for at least 6 months, she said, “Well, you’ll just have to make some adjustments.” ?!?!?!?!?! The “adjustment” was I was having to close my business. I was driven out of business instantaneously – their stupidity and arrogance destroyed a business I spent nearly a decade creating.

Posted: July 31, 2012 at 2:56 pm

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6 thoughts on “PayPal destroyed my business of 8 years in a day
  1. Joe McPlumber on

    It’s this sort of story that makes me wonder if PayPal is actually in the payment processing business or has some other business model (or motive) entirely. I mean, i should think they would encourage and cultivate businesses with $1,000,000/yr sales, considering the enormous fees they collect on that amount of commerce. But failing that what benefit to destroying it? Something is seriously wrong with this picture. Stupidity and arrogance, while longtime PayPal traditions, don’t account for this level of weirdness.

    Reply
  2. Finch on

    Paypal did the exact same thing to me; out of the blue for no reason they put a 30% rolling reserve on my account. My business can’t handle that. So my business was down for over a month until I finally had found a merchant account that would work for me. I lost over 20k in sales and PayPal still had 3K of my money on hold for 180 days. I really wish I would have known about Paypal’s shady practices before I got involved with them.

    Reply
  3. Finola on

    It is stories like these that make me happy I ran from paypal before I got screwed.My business would have bombed if they asked to take 5% of each of my sales. Hopefully you can fins a processor that will work better for you as it did for me. I went with merchantinc. YOu might want to look into them.

    Reply
  4. Matt Meredith on

    Paypal has to be one of the biggest ‘ligitimate’ scams ever. They take your money before you’ve even seen it and skim their fat chunk off the top without advertising their fees in a obvious manner. I will never use them again or eBay for that matter. RIP OFF MERCHANTS!!!!!!!!!!!

    Reply
  5. bryan on

    they got me too, 6 months ago i signed up for payment pro. i was suprised to see a rolling reserve on all my ebay sales and credit card transactions. no problem, i could live with that. yesterday i decided to cancel payment pro, they cancelled the rolling reserve and slapped me with a minimum reserve of $10,000.00 dollars!!! seriously they are holding that much as collateral against chargebacks & fraud. i have a 99.6 feedback on ebay and am a top rated and powerseller. WTF. to top it off they said i could get the money back 180 days after i cancel my ebay account. this should be illegal. they are not the federal or state government, they work for me, it is my money!! they cant do this to me. am i wrong?

    Reply
  6. Brian on

    Paypal has caused me to close down my online store. It’s a hobby for me, but still their unethical tactics have caused me nothing but issues, and they stole my money. I started a petition through change.org .

    Reply