That One Time PayPal Stole £10000's From My Online Business

Imagine watching £1000’s and £1000’s of pounds disappearing from your bank account. Day by day, week by week.

This is what happens when you get on the wrong side of PayPal without doing anything wrong.

PayPal doesn’t give a fuck when shit goes sour for you and your business. Or what I should say is – they don’t care if their “fraud” systems go crazy and wrongly flag you as a problem.

Back in 2013 when I first started my online business, I sold mobile phones like IPhones. And then went onto to sell video games and accessories.

I was killing it.

It didn’t take me long to start making some serious money from this business.

Branding, customer service, I hit all the right check boxes and business grew nicely on eBay.

Nothing could go wrong, or so I thought.

But then PayPal happened

A message similar to THIS popped up in my PayPal account. At first I didn’t understand what the F was even happening.

Account limited?

I eventually found out that:

Because my sales went through the ROOF, PayPal limited my account.
Their reasoning was “safety concerns” related to their fraud systems.

I’ll explain what all this means in a minute, but it’s a dangerous place to put yourself in. Because it can END your business overnight.

PayPal is shady

Ironically 1 year after THIS happened to me, PayPal was fined by a financial bureau for their “shady” practices.

Basically for similar things I’ll mention in this post, which adds weight to my point.

So with that said:

This Is How To Prevent PayPal Money Being Frozen:

1. Don’t use PayPal as a “main” source of income

This seems obvious, but it’s not when you’re thinking “that kind of thing can’t happen to me”.

I thought the same, as did 1000’s of online sellers before they ended up in this predicament.

If you intend to make a lot of money online or you know your business will eventually hit a point of “growth” where sales go through the roof, avoid PayPal.

This is what happened to me. Which leads to my next point.

2. IMMEDIATELY withdraw your money from PayPal sales

The main problem with keeping your money in a PayPal account is…. they have control over your money.

And you don’t even know it.

I happily let all my sales (about 80%-90%) sit inside my PayPal account comfortably. Never thinking or imagining what could happen because of that silly decision.

After all – you think to yourself “PayPal is like a bank account, so there’s nothing to worry about”.

This is the dumbest decision you can make

I later found out that in PayPal’s TOS (terms of service) they can do all kinds of shit with your money. Assuming your money is frozen and locked up in their account.

One of those things is this:

They can KEEP 80% of your money and withhold it from you.
And then about 10%-20% of every sale is deposited to your account.

Think about how MAD this is.

If your profit margin as a retailer is below 20% which is typical unless you sell accessories, you’re finished.

You’ll be losing money and bankrupting yourself with every single sale you make.

This is what happened to me. And I was forced to shut down my business a few months later.

I couldn’t kid myself anymore.

After all – my money was held hostage. And since I couldn’t ship out items on eBay to customers, my reviews took a nosedive and so did my reputation.

I spent the rest of my energy giving out refunds to customers in the £1000’s and by time I was finished, I had nothing left.

I was in debt and I could barely buy myself food at the supermarket!

And PayPal or eBay didn’t give a F despite the amount of money I was putting into their pockets through fees. As a top rated seller on eBay and PayPal.

3. Use alternatives like Stripe and credit card services

I’m not sure how it is these days with eBay and PayPal, but using other services that are more lenient and not as thoughtless is a good idea.

Stripe has systems in place to deal with chargebacks for example. Which was a big issue for me with PayPal.

And then you have services you can use with your BANK to take money from customers.

This is more legit, safe and smart because you’re not gonna be held hostage JUST for an increase in sales.

All because a “machine” is telling you why you’re wrong when the machine itself is flawed.

What To Do If Your PayPal Account is Already Frozen:

1. Stop using PayPal as a payment source

Don’t panic no matter what it looks like.

You can’t afford to keep using PayPal as a payment source if your account is frozen.

Any money thrown into the account through sales is gonna be frozen on top of what’s there already. So you won’t have access to it.

And if £100’s, £1000’s or more is flowing into your PayPal account while it’s frozen, you won’t see any of it until months and months later.

Or like me – you’ll be forced to live on 20% or less of it, on top of expenses, profit margins and everything else that goes into running your business.

2. REPORT it to a financial bureau if you feel they’re doing you wrong

This really isn’t helpful unless your voice is loud enough to make them pay attention. Which is why it took a BIG financial bureau to force PayPal to own up to their BS.

But it’s a step worth taking if you’re willing to go there.

With that said:

If it’s too late to cut off PayPal as a source of income…

You’re probably fucked.

Unless you’re able to get a lawyer involved and waste tons of your time trying to do something about it, there’s nothing you can do. Even if you have a lawyer, because of their terms, etc.

My business back in 2013+ was making a killing per week, and out of the blue PayPal froze the account because the “jump” in sales triggered their so-called “fraud” detection systems. As I’ve already said.

Even after going through the headache of getting legal/financial services involved, the result was the same.

After providing documentation which they’ll ask you for verification, your money will either:

Be held by PayPal for possibly 1 week or 1 month. Or even 6 months.
Or for each sale you make, they’ll give you 10% or 20% of the money you’ve made.

It could destroy your business as it did for me.

The lesson is simple:

If using PayPal, withdraw your money to your account. Or else your money is subject to their control.
Use someone else (like Stripe) or Visa’s merchant account. And you won’t have to deal with those kinds of problems.

I’d like to say things will turn out well for you if it’s already too late. But unfortunately it’s unlikely it will.