Online payment platforms, like PayPal, have really changed the way business operates. From generating invoices to money transactions, they offer a convenient and cost-effective method for day-to-day transactions. They also serve as a protective shield against credit card fraud and various scams. Thus ensuring a secure digital experience. Especially in the online eCommerce sector, PayPal is the top choice for payment gateways to boost online sales.
However, there’s a common issue that most of the merchants using PayPal have faced. And that when their PayPal account is frozen. A frozen PayPal account means – restricted money withdrawals and transfers. Funds within the account remain locked during this period. If all your amount is stuck in the PayPal account, it can be a really difficult situation as a merchant. This article is for you if you are currently facing this issue with your PayPal account.
Why Your PayPal Account Is Frozen?
Much like other payment processors, PayPal adopts a highly secure environment when it comes to providing payment solutions to businesses. PayPal is simple and easy to set up. Furthermore, it does not charge any advance fee or setup charges from the merchants. This is one of the reasons why PayPal is so popular across the world.
Having said that, it is essential to note that PayPal is strict about its policies. As a merchant one has to ensure that they follow the rules set by PayPal seriously. There might be two different consequences if you do not follow their rules.
- Your account gets blocked permanently.
- Your PayPal account gets frozen for a certain period of time.
Here are the reasons why any PayPal account gets frozen
Increase in Number of Disputes:
Excessive customer disputes concerning PayPal charges can significantly impact your business’s standing on the platform. Disputes typically arise when there are problems or issues with your products or services. If your customers are not happy with your services or products, they can raise a dispute. You are expected to resolve the complaints and update PayPal about it.
If there are no possibilities of a resolution, then you should initiate a refund. Remember if there are many unresolved and pending disputes in your account, PayPal might freeze your account.
Customers have several options to seek refunds from merchants. Here are the different ways a customer can raise a complaint and ask for a refund:
- Dispute: A customer raises a dispute if they find issues or flaws with your products or services. To be precise, this is not a refund claim but can lead to one if it stays unresolved for twenty days. As a merchant, you can reply to the dispute with proper proof to avoid a refund.
- Claim: If a dispute remains unresolved, the complainant can escalate it to a formal claim. PayPal steps in to review the transaction details and decides the rights and wrongs. The merchants get ten days to respond.
- Chargeback: Customers can file for a chargeback if they have used a credit card for the purchase. This falls outside PayPal’s radius, as the card issuer handles the investigation. However, PayPal may impose a fine on your company if the chargeback amount exceeds the limit.
New Sales Account:
When you use PayPal for sales, your funds may be held for a certain period. This temporary hold is important because PayPal uses this period to verify the legitimacy of your transactions. PayPal’s objective is to assess the potential risk of transaction disputes or chargebacks associated with your account. The more transactions you do the more trustworthy your account becomes.
As you build a track record of consistent and reliable transactions over an extended period, PayPal gradually lifts these holds, granting you immediate access to your transaction funds. It’s a phase that most PayPal merchants undergo when initiating their accounts.
Failure to regularly operate your account can result in the loss of instant withdrawal privileges. If your PayPal account has remained inactive for a certain period and suddenly there is a big transaction or multiple transactions, PayPal might freeze your account. They may ask for various details to ensure that it is you, who is doing legitimate transactions.
Suspected Unauthorized Access:
PayPal takes security seriously. If there are indications of unauthorized use of your account, it may be placed on hold. This might happen due to many reasons. One of them is accessing from a suspicious or blocked IP address or trying to access your account from a foreign country. But as soon as you give them the required proof that you had been accessing the account, they unfreeze your PayPal account.
Fluctuating Selling Patterns:
PayPal closely monitors transaction data on its platform for any signs of suspicious selling patterns. In an effort to mitigate potential risks, PayPal may opt to freeze accounts exhibiting questionable sales behavior. It’s important to note that PayPal can sometimes interpret fluctuations in revenue as potential indicators of fraudulent activity. Consequently, your account may be temporarily held, even if your business’s growth is entirely legitimate. PayPal’s primary concern is security and it is for the benefit of the customers and the merchants.
Selling Items That Are Considered “High Risk”:
Engaging in selling high-risk items via PayPal can lead to funding holds. As a payment service provider, PayPal operates under an underwriting system that may not fully accommodate the complexities associated with high-risk industries. PayPal exercises greater caution when providing immediate access to funds for businesses involved in selling products or services deemed high risk.
PayPal Account Frozen – What Can You Do To Unfreeze Your PayPal Account?
When your PayPal account gets frozen with all your money stuck, the initial step is going to the Resolution Center. Upon reaching this page, you will find several necessary steps to reinstate your account. In most instances, PayPal will require you to upload documents.
- Business Legitimacy Proof: Give proof related to your business, such as tax licenses, bank statements, utility bills, or DBA registration. These documents validate that your establishment is legit.
- Identity Proof: If there are concerns about your personal identification, you might be asked to submit images of some official documents like your Social Security Card, Driver’s License, and Passport.
- Proof of the Product(s): Send a list of all the products you currently sell under your establishment, including your supplier’s name and contact information. In some cases, PayPal can request evidence for the inventory of the item that is in question. You also have to click pictures of the inventory of the said products, so don’t forget that.
- Shipment Proof: To confirm that your product was indeed shipped to the buyer, PayPal may require proof of shipment. Verify the product shipment by providing the product’s tracking number and records of delivery, including the document that proves a successful delivery.
After submitting these documents, patiently wait for PayPal’s response. Typically, PayPal will send you an email acknowledgment within 24 hours to confirm the receipt of your information. After a few additional days, they will contact you again to confirm whether your account has been reinstated. If your account is unfrozen, you will get notified by email.
PayPal may request more information if the information provided by you is not adequate enough to convince their team. You should always provide the correct documents and clear pictures when asked.
While you can attempt to communicate with PayPal’s customer service representatives via phone, it is of no use until all documents are not provided.
How Much Time Does It Take Before Paypal Releases Your Account?
If you have submitted all the documents, you must understand that PayPal may not reinstate your account immediately. Getting the issue resolved might take a few days to a few weeks. Some issues get resolved quickly, within a day or two. Sometimes, the account stays frozen for 180 days or six months.
We can all agree that this waiting period is really long and could potentially disrupt a new business with all the money stuck in PayPal. But regrettably, you don’t have the power to do anything, as it falls within PayPal’s “Terms of Service,” to impose such measures.
How Can You Avoid Getting Your Account Frozen?
If you use PayPal for your business, we would always advise you to go through the terms of services that PayPal provides. It is a comprehensive document that gives a piece of detailed information about what you can do and what you cannot. You can go through their user agreement page, which can help you in understanding how to operate your PayPal account.
1. Work On Your Customer Service
Offering outstanding customer service is a critical step in avoiding claims, chargebacks, and disputes, which can ultimately decrease the likelihood of PayPal placing holds on your funds.
Customers may initiate payment disputes if they get substandard service. The customer might also raise a dispute if the items are not shipped in time or not shipped at all. So, keeping your shipping details ready is a must. Product quality is another reason why customers can complain. But everything can be handled easily if you have a good and proactive customer support system. The disputes can be resolved outside PayPal easily.
2. Exercise Caution with Transactions
Always exercise caution when engaging in “high-risk” transactions through PayPal. This includes refraining from selling items that violate PayPal’s Policies. Dealing with high-value items or participating in crowdfunded programs can be another high-risk activity that PayPal might scrutinize thoroughly.
3. Prevent “Product Not Received” Disputes
While shipping goods globally, accidents can occasionally occur. However, it’s crucial to be aware that “product not received” disputes are a common ploy used by fraudsters seeking to exploit the system. These individuals may falsely claim they never received an order and subsequently initiate a dispute with their credit card network or PayPal. To safeguard yourself from such fraudsters, follow the given steps.
Take the precaution of confirming orders before shipping them out. If you have the proof of the order, you have won half the battle.
- For high-value orders, implement the practice of requiring signatures and documented proof of delivery. This adds an extra layer of security and credibility to your transactions.
- Keep the customers updated about the shipping status. You always get an option in PayPal to update the shipping details and status.
4. Stay On Top Of the PayPal Alerts
Always reach each and every email sent by PayPal. You should not miss the email about any chargeback claims. Respond to these emails quickly. PayPal’s “Seller Protection Program” mandates swift action.
Failure to respond promptly can result in substantial fees and financial complications. By reviewing new PayPal notifications or emails, you can seamlessly stay informed about critical transaction-related matters and also about PayPal’s policies.
PayPal serves as a convenient payment platform catering to the needs of both online sellers and buyers. However, it’s important to note that PayPal enforces stringent terms, and even minor violations of these terms can lead to account limitations.
Following the tips we provided in this article will help prevent your account from getting frozen by PayPal. We have also guided you about how to get your account reactivated in case it is frozen.
Frequently Asked Questions
Can I access funds that are on hold in my PayPal account?
It depends on the reason why the payment was put on hold. For new users, there is a period of 21 days after receiving the funds before they can access it. If there is a dispute raised by the customer or the payment is deemed to be “risky,” then the timeframe might be different.
Is it possible for PayPal to freeze my linked bank account?
PayPal can’t freeze your linked bank accounts. PayPal can only freeze the money that is in your PayPal account.
What is the duration of a frozen PayPal account?
Unfortunately, there isn’t a fixed timeframe to it. PayPal follows different procedures for different situations. Some accounts get released within a few days of verification, and others might take as long as six months.
How can I continue my business with a frozen account?
You can opt for other options other than PayPal. It is not advised to open a second account on PayPal for the same business. The second account might also get frozen, and you might be permanently blocked by PayPal.
Can I send salaries to my employees?
No. You cannot. PayPal will permanently ban your business as this is against their policy.