Back when I was a new eBay Powerseller, I loved PayPal. People paid me instantly, and I didn’t have to run to the bank to deposit checks and wait until they cleared. Of course some people had problems, but I figured they were probably doing some sketchy stuff and had it coming…. Until it happened to me.
They don’t tell you this, but just one nervous buyer or seller can file a complaint against you, and that’s that. Even if they just don’t want to pay for it. Your account is disabled, a happy word for frozen. As in no access to your money. And you don’t get access until you do all of the following:
» Submit to a credit check
» Be home while they call you to verify phone number
» Fax them receipts from your inventory proving you have the stuff you’re selling (How do you prove you have an old computer???)
» Fax them driver’s license, utility bills, and more.
And then, after a week, if they deem you legit (which they did), I got my account access back. It can take longer if they ‘misplace’ your documents or somehow don’t receive your fax. And what if they don’t, in their almighty power, decide you are legit? Who knows.
And that, my friends, is why I don’t trust PayPal. And why you will never see me promote keeping funds in their Money Market Fund, which is also not FDIC Insured (although this is not necessarily a big deal if you trust the institution). There’s not way I’m leaving thousands of dollars with them to freeze at their whim. I do continue to use PayPal for small money transactions because, well, what choice do I have? I accept the risk, and withdraw all funds immediately. Besides, they already have my entire identity now…
By Jonathan Ping | Banking | 11/6/05, 9:29am