[Infowarrior] - Paypal Holds Sellers' Funds Hostage

[Richard Forno]

http://seekingalpha.com/article/105040-paypal-holds-sellers-funds-hostage?source=feed

Paypal Holds Sellers' Funds Hostage
by: Dinah Balk November 10, 2008 | about stocks: EBAY
Dinah Balk

Is it a glitch? Or is it another way to increase revenue? Who knows? I  
guess Donahoe knows but he's not talking. What am I referring to? eBay  
(EBAY) cleverly wove the mandatory use of Paypal into its user  
agreement and now that it's gone into effect, Paypal holds on sellers  
accounts have increased by leaps and bounds.

When is it going to end? My guess is when the State Attorneys General  
unite and regulate Paypal or when eBay ceases to exist – whichever  
comes first. My money is on eBay because there's been a 20% drop in  
traffic, the stock is at a low not seen in nearly 10 years, and  
disruptive innovations continue to drive buyers & sellers to user  
friendly sites like Bonanzle & Etsy.

New Glitch. On the morning of November 6 many sellers discovered they  
could not withdrawal funds from their Paypal accounts due to a glitch  
that eBay/Paypal has yet to acknowledge or resolve.

Is this related to the mysterious eCheck glitch? Sellers began  
reporting unexplained holds on their accounts as early as October 25  
and within 2 days the glitch spread like a virus throughout the eBay  
selling community as one seller after another discovered their funds  
had cleared but were being hostage as there was no way to claim them.

No resolution appears to be in sight and eBay/Paypal has yet to make  
an announcement or notify members. Paypal did offer sellers a few  
pennies on the dollar for the use of their money (if they had a Paypal  
Money Market account). Anyone want to guess how much money Paypal  
earned?

One eBay member named Permacrisis has an interesting theory. The extra  
load/artificial spike imposed on October 20th overloaded Paypal's  
servers (insufficient band with) and Paypal had to choose between  
collecting funds and disbursing funds.

Sellers have also reported that their funds are being held from a few  
days to months. eBay/Paypal excuses range from: 1) suspicious  
transaction; 2) no feedback from buyer; 3) less than 100 seller  
feedback; 4) false positives; 5) no shipping information; etc. etc.  
etc. none of which have anything to do with processing a transaction.

I think this situation was best summed up by deltamaster who wrote "If  
Wells Fargo, Bank of America, US Bank, or any other financial  
institution were to conduct business in this fashion there would be  
regulators crawling all over them like fire ants on a grasshopper."

Which begs the question, how can anyone trust Paypal because it is not  
regulated, profits from its failure to perform, and operates in a  
shroud of secrecy?