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Terms of Use (PayPal’s, not mine)

By Bernd Schneider

Please read this terms excerpt:

“When we deactivate your [account], we will remit to you the amount of cash (if any) in our segregated accounts that was last shown as available for you to spend using the Payment System. At our discretion, any such amount will be either transferred by us to the bank account last specified in your [account] as one to which you wished payments to be made out of the Payment System, or be paid by us to you by means of a cheque to your last known place of residence.”

Sounds fair enough? Probably is.

Nobody wants to challenge the right of PayPal to terminate accounts under specified conditions. It’s just that there should be clarity as to what happens to a customer’s money.

Oh, yeah, before we forget: the above terms excerpt is NOT from PayPal’s. It’s from EarthPort, a UK payment system similar to PayPal. They don’t aggressively entice members of the public to make remittances with them (they don’t pay for signing up). There are also no message boards with thousands of complaints about their service.

Maybe slow, but probably sound. And their terms sound fair enough.

Now, let’s see what we get from PayPal. That famous two-liner, for example:

Following an investigation, this account has been permanently locked due to violations of our Terms of Use. This decision may not be appealed.

I am not a native speaker of the English language, and I’m not a trained linguist. But the way I understand “permanently locked”, it doesn’t seem that I will get any money back. After all, “permanently” means forever, and “locked” would have to be understood as meaning that there would be no more movement on the account.

My impression is that PayPal are proud of their Terms of Use. I am of this opinion because it seems that they believe they have covered any conceivable situation. Their Help directory is huge, and based on their Terms of Use. Furthermore, their customer service replies read as if a corporate lawyer, not a person with a genuine interest to be of service, drafted them. I am sure they hold their legal department in high esteem. The lawyers call the shots.

Alas, their Terms of Use (the version I downloaded after I received that famous two-liner from PayPal) contains no reference on permanently locking an account, and the letter sequence “appeal” is not found in the whole document (just download their Terms of Use and run the Windows “Find on this Page” function; in my version of their Terms of Use, the letter sequence “appeal” doesn’t occur).

For all the wordiness of their Terms of Use, they can’t even match the terminology of their account “locking” mails with the one in their Terms.

So, what do we find in their Terms, regarding the termination of accounts?

Sorry folks, I have read their Terms of Use time and again, and there is nothing about “permanently locked” accounts.

The paragraph closest to what happened to me states:

“Closing and Restricting Accounts. – PayPal, at its sole discretion, reserves the right to close an account at any time for any reason, including but not limited to a violation of this Agreement, upon notice to the User and payment to the User of any unrestricted funds held in custody.”

But my account wasn’t closed, it was “permanently locked”. And what about “upon. payment to the User of any unrestricted funds held in custody.”

It’s a bit twisted, but when you analyze it phrase by phrase, you sort-of get the sense of what it all means. The following statements are made: 1. PayPal can close an account at will. 2. The account is closed upon notice to the User. 3. The account is closed upon payment to the User of any unrestricted funds held in custody.

Now, take a look on how smart they moved on my case: they didn’t close my account, they just “permanently locked” it, which I understand to mean the same as “permanently restricted” it. If they now close it, there are no unrestricted funds to return to me. So, I can kiss my money good bye.

I am not the only one who has been informed in the above-quoted way. On the day the first version of this article was written (December 21, 2001) Andrew contributed the following post to the AuctionWatch message board:

“Damon, I have a question. – Some people have been getting e-mails (like in this case) that say that they have violated the Terms of Use and their accounts are permanently locked and the decision can not be appealed (even if they didn’t violate the TOU). Do you then keep the money in those accounts forever?”

I would like as many people as possible, who all have received that famous two-liner, to contact me so that we could explore together whether we have been treated unfairly.

By the way, my legal counsel has advised me that for the meantime I better not log into my “permanently locked” PayPal account. I could unintentionally “sign” revised Terms of Use by carelessly logging in, as stated in the Terms of Use copy I hold:

“By clicking “I Agree”, “I Accept”; or by submitting payment information through the Service you agree to the terms and conditions of this Agreement, the PayPal Privacy Policy, and any documents incorporated by reference. You further agree that this User Agreement forms a legally binding contract between you and PayPal, and that this Agreement constitutes “a writing signed by You” under any applicable law or regulation. Any rights not expressly granted herein are reserved by PayPal, Inc. This Agreement is subject to change by PayPal without prior notice (unless prior notice is required by law), by posting of the revised Agreement on the PayPal website. Descriptions of material amendments to this Agreement will be posted in advance on the PayPal website in the “Policy Updates” section that is displayed to you when you log in to your account. You can also set your Preferences to receive e-mail notification of all policy updates. You may review the current Agreement prior to initiating a transaction at any time at our User Agreement page page.” [sic, duplicated word]

“Material amendments” will be posted in advance, they say. This means that amendments that are not material will not be posted in advance. Who decides what is “material”? You guessed it. Loopholes as big as garage gates.

But anyway, just to be sure: “This Agreement is subject to change by PayPal without prior notice (unless prior notice is required by law).” Such statements do create the impression that they won’t give in an inch, if not upon demand of legislators and regulators.

Apart from that, I don’t think it is proper conduct to repeatedly change the Terms of Use and just name this “Policy Updates”. A policy is not the same as an agreement between two parties. A policy is a unilateral measure. A company can have the policy of having secretaries answering the phone by saying: “Welcome to PayPal!” They can change this policy to saying: “Please wait.”

In case they initiate changes to their Terms of Use by which an account they previously accepted all of a sudden becomes an account that violates their Terms of Use, and then proceed to confiscate the funds, then this constitutes, in my understanding of the English language, not just a policy update, but an unilateral change of contract.

Posted: April 20, 2012 at 12:35 pm


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One thought on “Terms of Use (PayPal’s, not mine)
  1. Solar-systems 4 you on

    People get their panties in a twist about their paypal accounts on a daily basis. The terms of using their services are rock solid on their end – they have to be. If you don’t like it, use another company. I’m currently disputing a hold on my account and to tell you the truth, I know I’m screwed but I’m going through the steps any ways. It’s a fact of life, if you want to do business with the big dawgs you will play by their rules.