Should I be leery of PayPal?

by ina696
28 replies
I'm just getting started in Internet Marketing. I've read some pretty negative comments all over the Internet about PayPal. Freezing accounts. Pathetic customer service. Weird emails asking for verification of account information (phishing). Then, they could arbitrarily accuse you of violating their terms of service.

I've received a couple of phishing emails and then, the last straw was that PayPal placed a limit on my (basic) account with no clear explanation of why. As such, I couldn't use the account or close it without verifying a credit card number. I've since successfully resolved whatever issue they had (there was no money in my actual account; I use my credit card to pay merchants through their system).

Question: Should I be leery of PayPal for a business account? Or are my fears unnecessary?

It seems most experienced IM gurus recommend PayPal. I understand customers love them and they pay instantly into your account. Great benefits, both. But I can only imagine how bad it could be to have large amounts of cash in an account when something like the above scenarios could cut off your cash flow and jeopardize your customer relationships.
#leery #paypal
  • Profile picture of the author Sabine
    I too have heard similar stories about paypal. As a matter of fact my husband and I were talking about it just this morning and were wondering who else could be used to collect payment if not paypal. Maybe some more experienced Warriors could give us some idea who else is out there and more reliable? Thanks in advance.
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  • Profile picture of the author SeanSupplee
    If you follow the rules and don't go off making get rich quick schemes your paypal account with be find. I have had my paypal account since 2002 with no issues what so ever. If you expect to get a lot of charge backs or jump into bad programs that is when you are going to get hurt. Run a honest business your fine nothing to fear

    Other options if you want credit cards would be 2checkout.com which has a small set up fee that is under $100 to get started. Will accept all major credit cards.
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  • Profile picture of the author ina696
    Thanks Sabine, I feel a lot better knowing that someone else shared my concerns.

    And thanks, SeanSupplee. I agree in that if you don't violate their TOS or otherwise have any problems with how you operate the business, everything should be fine.

    I have accounts with both Clickbank and 2Checkout and never had a problem with either. The majority of the sites I visit seem to have PayPal set up for their payments. I think that's fine for being paid quickly.

    I've read somewhere that if there is suddenly a large influx of cash into your account, PayPal may temporarily freeze the account until they review the situation. There are at least 2 books that heed doing business with PayPal and a website called "PayPal Sucks" devoted to posts from people whose accounts have been arbitrarily limited, suspended or otherwise shut down...with little clear explanation.

    My concern is that there was absolutely nothing to be concerned with my account for. Yet, my account was limited. So I ended up registering a credit card with them just to have limitations removed. Then I canceled the account in frustration.

    SeanSupplee's experience gives me some hope. But are there others out there who use PayPal for a business account and have nothing but good things to say?
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    • Profile picture of the author ina696
      Thanks for the reply, Marv. Yes, I will be selling information products exclusively.
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      • Profile picture of the author MyShopPass
        I sell products from one of my sites and if it wern't for paypal, that would not be happening today.

        The only issues I had were sending "internetaionally" especially London area where too many times "PayPal" has took back funds because of complaints on not getting products...However, it fair to say we didn't have or pay for "signiture" of delivered goods becasue it was cheaper to resend the products which were CD's. Now any international orders have to be paid for by postal check and yes we did take a big hit on our international sales.
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  • Profile picture of the author GuerrillaIM
    Been setting up online companies for some years now and I cringe every time my client wants to use paypal. Their customer service is rubbish and I don't like their API. My personal favourite is paypoint.net because customer service is excellent and their api is great. But I'm not sure if they only cover the UK and you will need a merchant account from your bank to use them.
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  • Profile picture of the author timpears
    Don't believe people when they tell you that if you run an honest business and follow the TOS, and are not out there scamming people then you have nothing to worry about. That is just totally rubbish.

    PayPal is pretty easy to use, and almost everyone has an account, so it is very convenient. My best advice is NEVER leave money in there. Download the money to your bank at least every day. They are not regulated, like a bank is, even though they act very much like a bank. They can lock up your account for no reason then they get a feeling to do it. And they have done it. I got my account locked up, and it took me about a month to find out why. And it turned out that it was over my complaining about a merchant not delivering my merchandise, and they asked me for a few documents, and I didn't send one of them in. I got my money back from the merchant, and everything seemed fine, and then one day I found my account locked up and my attempt to find out why was like talking to a telephone pole. Now why I needed to supply so many documents was beyond me, especially when the issue had been resolved.

    That is just one story, there are many others worse than that. Fortunately I had downloaded my money the day before they locked it up. It wouldn't have been so bad if I could have found out the problem and so taken steps to resolve it, but it took me more time to find out the problem than to get it resolved.

    I don't suggest not using PayPal, but just be careful and don't leave any money in there. You don't have to do anything wrong to have a problem. And customer service SUCKS, big time.
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    Tim Pears

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  • Profile picture of the author bobcath
    I've never had even ONE problem with Paypal in over eight years dealing with and many thousands of transactions.

    Regards
    Bobby
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  • Profile picture of the author ph1470
    Paypal is to expensive and restrictive.
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  • Profile picture of the author Simo
    Originally Posted by ina696 View Post

    I'm just getting started in Internet Marketing. I've read some pretty negative comments all over the Internet about PayPal. Freezing accounts. Pathetic customer service. Weird emails asking for verification of account information (phishing). Then, they could arbitrarily accuse you of violating their terms of service
    The advice I have had around this is if the pattern of incoming revenue changes drastically and you haven't notified them that your doing a product launch etc, then they may freeze your account (fearing you are conducting illegal activity). Treat Paypal like a trusted advisor - communicate with them and often these problems disappear.
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    • Profile picture of the author jlandells
      Originally Posted by iamsimo View Post

      The advice I have had around this is if the pattern of incoming revenue changes drastically and you haven't notified them that your doing a product launch etc, then they may freeze your account (fearing you are conducting illegal activity). Treat Paypal like a trusted advisor - communicate with them and often these problems disappear.
      What do you find is the best way to communicate with them? Everyone I've spoken to says they don't respond to emails and don't have phone numbers...! :confused:

      -John.
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  • Profile picture of the author alexander13
    ina696,

    I've never had any problems with it but when a site gets big enough they get bolder about abusing this power.

    If you don't like what they're doing getting your own merchant account is another solution. Those merchant providers can be as much of a bear as any other payment processor.

    Basically, look at em as a necessary evil and do what you can to stay on their good side.
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  • Profile picture of the author Chris Lockwood
    Originally Posted by ina696 View Post

    I've received a couple of phishing emails and then, the last straw was that PayPal placed a limit on my (basic) account with no clear explanation of why. As such, I couldn't use the account or close it without verifying a credit card number. I've since successfully resolved whatever issue they had (there was no money in my actual account; I use my credit card to pay merchants through their system).
    Every new account has a limit until you verify some information. This is normal and nothing to worry about.

    The reason should be obvious- they want to know who you are, and they don't want you using their service for money laundering or other illegal activities.

    And those phishing emails do NOT come from Paypal- if they did, they wouldn't be phishing. Not sure why you would blame Paypal when someone else impersonates them.
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  • Profile picture of the author Emailrevealer
    Just get a reakl merchasnt payment processor like authorize.net. The fees are cheaper, the chargebacks are fewer and are resolved much quicker.
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    • Profile picture of the author Wade Watson
      PayPal is the 600 LB financial gorilla of the Internet. It's hard to avoid them, so it's best to find a way to work with them. As an eBay seller, I've had no real choice but to use them for years and I've had plenty of gripes, but I've learned to manage. They do have some sleazy practices, like the "verifed address" bit. They ask you to give them a bank account number/routing number to "verify" your address. Then you suddenly find your default payment method is a draft on your bank account and you have to opt out of it during every transaction.

      Use of PayPal is so widespread, as a merchant you're risking loosing business if you don't offer sales through them. Just be careful what you sell and how you treat customers and you'll fair alright with them.

      --Wade
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      • Profile picture of the author Kay King
        They do have some sleazy practices, like the "verifed address" bit. They ask you to give them a bank account number/routing number to "verify" your address. Then you suddenly find your default payment method is a draft on your bank account and you have to opt out of it during every transaction.
        Verifying addresses is not sleazy. Simple fact is paypal does not accept accounts from all countries. Very common questions on this forum is "I live in a country not accepted by paypal -how can I get a US address to get a paypal account". Now, that's sleazy!

        Those people have a problem when paypal requests address verification - because they lied and can't provide it. The list of how payments are deducted from your account is posted on paypal. First, from your paypal balance, then from your selected alternate source, which may be your bank account or may be a credit card. You can change the alternate source in your account to charge a card before your bank account.

        All of the details paypal wants are to provide added security - which is why customers are comfortable using paypal.

        kay
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  • Profile picture of the author MosaicDan
    I run a private membership site. All of the payments are handled through paypal and all payments are automatic recurring monthly payments as well.

    There are hundreds and hundreds of transactions per month. I've been doing this since last May without a problem.

    I've also been a full time Internet marketer for over 7 years and have had a paypal account since 2002, and have never had a problem with paypal.

    Also, because I started doing so much business with paypal, they emailed me one day saying I have my own personal line for support and can call whenever I have any problems.

    Of course this doesn't mean there couldn't be problems, but I haven't had any and I've had a lot of experience.

    I find the argument that to avoid them because they are not regulated a little bit silly. Lots of people have problems with banks even if they are regulated.

    My 2 cents,
    Dan Ho
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    • Profile picture of the author lindgren
      hi
      I am really shocked to hear about all these stories with paypal. Now I am Danish and I had to fax some verification papers, when I signed up. They immetiately wrote me back and thanked mefor the fine coorporation. I have also called them because I didn't understand something, and they immetiately responded so I always praise their excellent customer service.

      I must say I find it very weird that we are so many with so many experiences ???
      All I can say is : I have never had any problems what so ever :-)
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      Best Wishes
      Tina Lindgren


      http://www.tinalindgren.com
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      • Profile picture of the author Wade Watson
        The sleazy part of PayPal's verification bit is not that they are checking addresses. It's that they perform a deception by using this to get a user's bank routing number and switch the default payment to that. This is unquestionably deceptive because they do not tell you before hand that this change will occur. It's really surprising me that governmental regulators have not looked into PayPal's business methods yet. They should have to abide by the same standards that banks do.
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  • Profile picture of the author Chris Lockwood
    Kay is absolutely right- I don't know why anyone gets upset at PayPal wanting them to provide documentation (unless the person is trying to do something outside the rules). Try getting a merchant account or opening a bank account without doing that.

    PayPal does have phone numbers for support, since plenty of people have reported calling them. You might have to poke around their site to find the numbers, but they do exist.
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  • Profile picture of the author Pat Blank
    I've been with PayPal since before they were owned by eBay. I'm not a large account. I've had many problems with the over the years. But, they are what a lot of people want to use. Besides, all payment methods have some kind of problem.

    I recommend having two bank accounts, one of which is the one you use with Paypal. Every day, take any $ out of Paypal and transfer it to Account#1. Then immediately transfer it into Account#2. Keep Account #1 as empty as you can. That way Paypal can't automatically take money out of your bank account. This has saved me several times when Paypal has decided to randomly freeze my Paypal account.
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  • Profile picture of the author runfast
    I've used PayPal for 5 year never had a problem. I wouldn't use the Merchant Service there are better and cheaper ones out there
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    • Profile picture of the author ina696
      Thanks to everyone who responded. I see that marketer's experiences run the gamut...

      Yes, PayPal has many telephone numbers (I did an online search from a site like PayPal Sucks.com and found dozens of numbers. Tried a few until I got through to a real person. He helped me to resolve the issue and I was able to close the account.

      I think I'll stick with Clickbank and use their option for PayPal payments for customers who prefer to pay through them.
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  • Profile picture of the author jlandells
    Hi All,

    I don't know if you've seen this thread:

    http://www.warriorforum.com/main-int...-me-today.html

    It highlights exactly the problem that ina696 was asking about....

    -John.
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  • Profile picture of the author SeanSupplee
    nlfast that must not be a business or verified account then. In order to pass more money though you have to go though a verification its to protect buyers.

    Look its simple if you are going to sell some crap and rip people off money so they do charge backs then dont bother using paypal they are going to freeze your account. If you use it right you wont have any issues its as simple as that
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