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PayPal and Ebay's 21 Day Hold Scam; Squeezing Out The Little Guy

Posted By: Matt McGloin
Sun, 10/02/2011 - 16:28

Update: A few days after I canceled my account, PayPal sent an e-mail stating they were no longer withholding my funds.


crisis on infinite earthsRecently PayPal and EBay instituted a new policy where they may place any payments received through PayPal on hold for up to 21 days - this includes shipping costs, as well.

Yep, you have to pay for shipping out of pocket. 

Their reasoning, as I was told over the phone, is to combat fraud; so they assign this policy to "high risk" sellers.

The factors that they take into consideration for "high risk" sellers can be read in the following e-mail I received:

Why are my payments being held?
We reviewed your account and determined that there's a relatively higher than average risk of future transaction issues (such as claims, or chargebacks, or payment reversals). We understand that it may be inconvenient to have your payments temporarily held but please know that we didn't make this decision lightly.
Before deciding to hold payments, we consider many factors. These factors include account and transaction activity, the rate of customer disputes, the type of business a seller runs, average delivery timeframes, customer satisfaction, performance and history.
Presently, I have sold a number of comic books using EBay, and required PayPal for payment. And I have 100% positive feedback.
I also use PayPal for a number of other things.
However, after each sale this is the e-mail sent from PayPal:
Dear matthew mcgloin,
Your funds are pending - please process this order
You received a payment from xxxxxx xxxxx.
This money is being temporarily held in your pending balance. It will be held for up to 21 days. While it's being held, it won't be available for withdrawal.
We'll move the money to your available balance after 21 days as long as your buyer hasn't reported a problem. It may be available sooner if we can confirm that the item was delivered or, if this is an eBay item, your buyer leaves positive feedback.
To get access to this money more quickly, please process this order right away and communicate with your customers early and often.
Payment details 
Amount (pending): $xxx USD
Transaction ID: xxxxxxxxx
Buyer's email: xxxxxx
Ship to address: xxx xxxx
xxx, xxx
We recommend that you:
Log in and go to the Transaction Details page to see if you're eligible for seller protection on this payment
Ship to the buyer's address on the Transaction Details page
Use a shipping service that offers signature confirmation
Save all tracking information or other proof of shipment
Let your buyer know their item shipped by adding tracking information on the Transaction Details page

Of course, I shipped the items, again out of pocket. I was even forced to pay further costs - out of pocket - when a buyer's items were not grouped together by EBay, which led to the buyer paying shipping individually. I sent the books out shipped together and refunded the over charge. At my expense.

Now I have to play the waiting game.

So I complained with PayPal via an online form, and as expected, received an automated response not answering my questions as to why my account was on hold and whether or not I would get my cost of shipping back before I receive payment for the items.

I then called up customer service. The guy would check out my account. 

Do I sell electronics?


Do I sell high-priced items?


Complaints against me?


Negative Rating?


Have you sold these items before?


He then said it is most likely because my sales are not consistent, meaning I only sell here or there. Also, I haven't accrued enough "positive" feedback in the last 6 months - even though I have been on EBay for 10+ years or so. I then asked about being reimbursed for my having to pay shipping (as shipping is already paid and can be verifired). To which he said it's not a reimbursement it is a refund. He then said I should add in the cost to the shipping the buyer pays! With my response being - it's placed on hold!


He continued on, stating most likely the hold on the funds would be lifted in 24-48 hours once shipping was confirmed and the buyer leaves positive feedback.


Hey, I'm all for stopping fraud, but penalize the bad guys, not me. I can understand slapping this on someone with negative feedback, but seeing how I haven't had one darn negative comment, it's just BS.

Sure, you can argue that PayPal and EBay are private businesses, which fall under the banking laws that enable them to do this - but it just stinks, is what it does.

I've already filed a complaint with my Attorney General's office. Who knows? Maybe if they get enough, something might be done.

And what happens to my money during that 21 day hold?? Hmmm....

Really, what my experience in this tells me is that both EBay and PayPal do not want my business, because I am not a "big" enough seller. That they don't want the occasional person selling an item or two on EBay. 

That's fine. I'll be cancelling my PayPal and EBay accounts in about....21 days.