PayPal permanently confiscating money from digital traders

There have been lots of discussions recently about PayPal taking actions against trading digital goods, and we are finally starting to see what those actions are.
Many traders have been using various workarounds for PayPal payments, but it looks like PayPal has finally caught up to it and started permanently freezing their funds.
There has been a number of reports recently where various businesses involved in trading digital goods, had their accounts permanently frozen without an ability to receive their money back, which is a straight-up theft in my opinion.

They have been limiting accounts and sending warnings to digital goods traders emails to not participate in trading digital goods for a while now. Since these warnings are only sent via email and you don’t actually see any form of notification in your PayPal account, it’s very easy to miss, and you can only realize what’s going on after your account is already frozen.
Screenshot - 0a99c650cedc3283f85824923ddeab39 - Gyazo

But as it appears at the moment they are not willing to work with them to restore access to their PayPal accounts and have frozen their money permanently. I would advise taking extreme care when dealing with PayPal because there is a huge possibility you might lose your money.

Official statements from PayPal s term and conditions:

If we believe that you’ve engaged in any of these activities, we may take a number of actions to protect PayPal, its customers and others at any time in our sole discretion. The actions we make take include, but are not limited to, the following:

• Terminate this user agreement, limit your PayPal account (and any linked Cash Account), and/or close or suspend your PayPal account (and any linked Cash Account), immediately and without penalty to us;
  
  
• If you are a seller and you violate the Acceptable Use Policy, then in addition to being subject to the above actions you will be liable to PayPal for the amount of PayPal's damages caused by your violation of the Acceptable Use Policy. You acknowledge and agree that $2,500.00 U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal's actual damages considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated because, due to the nature of the violations of the Acceptable Use Policy, actual damages would be impractical or extremely difficult to calculate. PayPal may deduct such damages directly from any existing balance in any PayPal account you control.
  

What this basically means is that they can do whatever they want with your account, and can deduct any amount of damages from your account on their own discretion with no accountability whatsoever, since you have agreed to their terms and conditions.

Here is an example of this:
Paypal took my money | Payment to:Paypal;PayPal's ... - PayPal Community

And yeah this is not some sort of BS, my own account with $14k was limited a long time ago and a few months after 180 days limit has passed I noticed that all funds got transferred to PayPal. There was no email, no notifications, just a transfer inside PayPal with this note PayPal's damages caused by Acceptable Use Policy violation. Apparently, the only way to solve this is legal and that isn't promising as PayPal doesn't want us on-board and we have to accept their terms and conditions.

So to everyone who thinks that they have out-smarted the system by using fake business names and websites, false invoice information just to pretend that it's not Runescape related, think twice as you're risking to completely lose your money.

Btw, this started happening in late 2019.

 

Well this isn't convenient....

 

[PixelRates]

which is a straight-up theft in my opinion

I 100% agree that this kind of behavior is unethical at best, I think they are banking on the fact that most RSGP sellers are either foreign or too small to take any legal action on them. I highly doubt a term like paypal's is legally enforceable since they would need to actually show how $2500 worth of damages were done on each occasion for it to stick.

 

Just curious if they'd freeze accounts doing btc -> PP transfers.

 

Just curious if they'd freeze accounts doing btc -> PP transfers.

Yes they most certainly would. If they have proof of it, ofcourse.

 

Yes they most certainly would. If they have proof of it, ofcourse.

Straight out robbery lol.

 

[ob7ivion]

Just curious if they'd freeze accounts doing btc -> PP transfers.

it still falls under the "digital goods" category so yea. It's just a lot more unlikely for us smaller plebs to get caught compared to gold site owners.

 

it still falls under the "digital goods" category so yea. It's just a lot more unlikely for us smaller plebs to get caught compared to gold site owners.

That's true.

The problem is that before big gold sites would just remake a new Paypal under a new name / new details and continue as usual. In which Paypal would be hunting for their new Paypal account just to lock it again.

Now Paypal has set restrictions if you start accepting payments over a certain treshhold (if your paypal is new). You need to upload all sorts of documents and Paypal does a detailed scan of your business activities. If they don't like what they see they just lock the new account straight away. So the chances of a big gold site making a new Paypal account and keeping it for the longer term are pretty small.

 

[iJustine]

This is why I never keep big amounts in my PayPal balance and only handle big transfers over Bitcoin instead.

 

This is why I never keep big amounts in my PayPal balance and only handle big transfers over Bitcoin instead.

I think most big sites have this mindset however we cannot turn big customers away simply because they cannot pay with Crypto. For us (before we got locked) we had a revenue of around $168.000 per month via Paypal and dumping those funds consistently month after month isn't an easy task.

 

[Tzej]

RuneScape should replace the highway man with a payal logo.
But in all seriousness Taking $14k of someone’s money has legal repercussions regardless of any TOS

 

RuneScape should replace the highway man with a payal logo.
But in all seriousness Taking $14k of someone’s money has legal repercussions regardless of any TOS

They're aware it will cost you a lot more than 10k$ to go on lawsuit against paypal, and most traders don't have that kind of money just sitting around

 

Money Launderers Exploit Online Gaming Loopholes
Gonna put this here.
Everyone interested in the possible future outlook of the business model regarding trading RS gold (or any game products in general) should read this. Quite interesting read.

The article describes the issues at hand why companies like Paypal, Skrill, G2A and other acquirers are kicking out RS gold sellers

 

[Soniqq]

dang that sucks

 

[Obamaphobic]

This sounds 100% like something PayPal would do. They once ruled against me in a dispute for digital goods (just because it was a digital good even though I had proof of transaction beyond belief) and set my account to -$2000. They also did me the curtesy of tacking on a fee for my account going negative.

I foolishly had my real SSN on my PayPal and they tried to send me to collections. I fought it there and won because they didn’t have the right to arbitrarily declare I owed them $2000+ dollars. Basically I wrote a letter demanding the provide all transcripts, audio files, and details of the transaction and prove that I owed a debt of $2000.

My lesson learned was to not use my real identity on my PayPal and I only attach a debit card to my PayPal. Keep nothing in the balance and any money I make I “instant” transfer it to my bank. So if they pull shit like this on me I don’t lose everything.

 

[Obamaphobic]

The cost of the “instant” transfer is 1% but to me it’s worth not linking my bank account and validating my identity to them.

I generally only use PayPal to deposit my BTC from coinbase and send payments now also. Won’t accept payments 99.9% of the time, learned from that mistake.

 

The cost of the “instant” transfer is 1% but to me it’s worth not linking my bank account and validating my identity to them.

I generally only use PayPal to deposit my BTC from coinbase and send payments now also. Won’t accept payments 99.9% of the time, learned from that mistake.

Using unverified Paypal accounts or accounts on a fake identity will end badly in so many ways more than I can count. Locks mostly happen straight after a transaction, so for example you would receive $1000 from someone on a Paypal under a fake name, they would freeze your account for investigation and ask for Passport and proof of residence again. Goodluck shaking fake documents out of your sleeve. If they would close ur account indefinately then you have 0 chance to get your remaining money out of the account.

 

[BellaCIAO]

Hopefully paypal will become a thing of the past i have been using Skrill for 1 year and received around 10k in total and no locks or for that matter any chargebacks.

 

Hopefully paypal will become a thing of the past i have been using Skrill for 1 year and received around 10k in total and no locks or for that matter any chargebacks.

Skrill doesn't support the industry AFAIK. At least in terms of verified on-boarded merchant accounts. The issue in general is that PayPal does not apply their own ToS universally across all merchants. It leads to certain companies having a major competitive advantage simply because PayPal does not close their account.

The market would move past PayPal if they applied their rules equally to everyone. What they are doing is incredibly anti-competitive. If Paypal just actually closed everyone's account who is selling RS Gold, the problem would be solved almost overnight.

They are stealing people's funds for operating an RS Gold shop on one side, while some companies in the RS Gold business have had their PayPals untouched for 5-10 years!

This means customers will gravitate towards any site with a working Paypal account. It also means that sites with a closed Paypal account are pressured to using third parties and other means to accept Paypal again. If you have no way to accept PayPal, you'll lose a considerable portion of your business almost overnight, because they'll simply find another site that does. It's a mess.

 

I had this happen back in like 2015. I'm just surprised how it got this far