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Comment by rgbrenner | Hacker News Reader

Nothing in his post suggests PayPal has violated their agreements.

In fact, nothing here would be out of line for any merchant account (except maybe the customer service issues).

2% chargeback rate is extremely high. It would get you shutdown pretty much everywhere. MSP agreements usually say between 0.25% to 1% for the chargeback rate limit. This is 10x what i've seen some banks specify as an acceptable chargeback rate.

And if you exceed it.. you get warnings, reserve lines and longer holding periods, and eventually the termination of your account. Exactly what happened to OP.

Each one of those actions should have been a red flag to the merchant tellling them they have a serious problem they need to address.

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Sorry for the delayed reply, HN wasn't letting me comment. You don't seem to understand that Paypal agreed to my 2% chargeback rate, in fact they came up with the $5000 set reserve + 10% rolling reserve in order to let me run. Not once did Paypal tell me I'm at risk of losing my account or getting my funds frozen for 6 months. I have had 0 warnings. The issue here is bigger than that, it's the inconsistency in what they request, it's Paypal requesting information but not letting me provide it, it's Paypal's inner departments not speaking to each other and every time you call in you get different information. When I log into my account it still says it's limited because Paypal needs more information regarding recent sales, but guess what, they don't tell you which information they need or how to provide it. Paypal was aware of my high dispute rate and agreed to work with me based on the reserve they wanted which I accepted. Not once did I receive a warning contrarily to what you may think.

I hear from my MSP all the time about security improvements that need to be made, changes to visa/etc networks, rate changes, etc.

The number of times I've had an MSP call me to discuss fraud in the past 14 years I've had one or more merchant accounts: 0

The number of times I've had an MSP establish a reserve line for my account: 0

The chargeback rate for an ecommerce site I've run for 14 years: 0.1% (about 1 every 1000 orders)

MSPs don't normally contact their customers to discuss fraud. They don't normally require reserves.

Every time they contacted you about the chargeback rate was a warning. When they set the reserve line that was a warning. You didn't negotiate the right to the chargeback rate.. you negotiated how severely their anti-fraud control would impact your business.

These were HUGE red flags. Possibly the biggest red flags you could have gotten, short of a legal notice or the immediate closure of the account.

And while it sounds like PayPal should have been more direct with you about the consequences here... I can tell you that every MSP agreement I've ever seen specially talks about these actions as negative actions they may take to mitigate the risk of fraud.

0.0001% (about 1 every 1000 orders)

1 in 1000 is 0.1%

thank you.. my brain has clearly failed me.

If you click on the link that says "x minutes ago" you'll get a reply option. Or it might have to do with your account being new.

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