PayPal's automated fraud detection is notoriously inaccurate. They also don't have very good customer service. For years their phone number was hidden 10 pages deep where no one could find it. They freeze your account and hide from you.
A while back they ran into some trouble with the bank that was sponsoring their merchant account, they had to quickly make changes to keep processing.
Instead of spending money to improve their fraud/risk algorithm, they just lowered the threshold that triggers an account freeze, which helps with fraud but also drastically increases the number of false-positives, which they consider acceptable collateral damage.
They aren't even nice about it. Why tell me my account is "frozen"? Why can't they say "Congratulations on the recent spike in transactions. Your business must be doing well and we are delighted to hear that! Please give us a call when you can so we can go over some additional documentation that we will need from you".
Think about this: PayPal freezes your account, which brings your business to a halt, then you have to scramble to fix it. PayPal doesn't need to freeze your account, they can just as easily prevent you from withdrawing money to your bank account, which sucks but it probably won't kill your business. At least your customers can still pay you. They even have a "window" to reverse most transactions, but they would rather just freeze your account and act all nonchalant about it.
The logistics of PayPal is all wrong. Work with your customers, not against them.