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Comment by tyingq | Hacker News Reader

I don't understand how it's legal for PayPal to hold his money for 180 days because they don't like the nature of his transactions. Kick him off their platform, sure...that's their prerogative. But why do they get to hold the money hostage?

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Uh - because he may be ripping people off or people may file claims for a refund, and if they give it to the scammer it's hard to give get it back to make folks who got ripped off whole?

This is 101 stuff. Credit card companies do this routinely as well. I'm hearing fyre festivals will be harder to get immediate payout on.

Travel does this when businesses are near bust - credit card companies will hold funds.

It's a 20 year old account, and this activity doesn't seem to be new, or associated with fraud, etc. What aspect of what he's doing seems similar to Fyre? I don't understand the flippant tone.

The tech companies are not analyzing things at this level. They close a number of accounts each month. A certain number of those were engaged in fraud and will generate chargeback activity. Others were legit but accepting payments in advance. Once the business is out of business those too will generate chargeback activity. Some are legit but had bad service, lost key employees resulting in complaints. Once the account is shut those also often generate chargebacks.

So they sit on the money for 180 days, it doesn't cost them anything and saves them a big pain in trying to claw money back from any of these folks who may not look at them that fondly after being cutoff for what may have a been a silly reason.

The problem here is that is sounds like he was SENDING money not RECIEVING money,

They can trace where the money came from, if I put money into the account so I could pay someone they find objectionable and then shut me down they should not be able to hold that money because it is not a fraud issue, i did not receive from a 3rd party, it is 100% my money

yet they also hold these funds for the 180 days

Something tells me, "read the fine print"?

And his account can be taken over by someone else, or his behaviour could change. Account age shouldn't be a huge determining factor.

> because he may be ripping people off or people may file claims for a refund

This is a reasonable argument in general, but it falls apart here because there was a human in the loop who knows why the account was disabled, and knows that it wasn’t for suspicion of scammy behavior, nor for suspicion of insufficient funds.

In general it might be there to ensure no fraud is happening - when my account was flagged for being under 18 (at the time), they held my money for the 180 days before letting me take it out. I imagine they do (or used to) experience fraud from people signing up for accounts using the identities of children.

I believe that's in the ToS. At least in the US, they have a quite restrictive binding arbitration agreement.

Interesting. I wonder if a small claims court (assuming the balance wasn't too large) would help.

Edit: found the text in the TOS:

"Holds based on PayPal's risk decisions

We may place a hold on payments sent to your PayPal account if, in our sole discretion, we believe that there may be a high level of risk associated with you, your PayPal account, or your transactions or that placing such a hold is necessary to comply with state or federal regulatory requirements...

Risk-based holds generally remain in place for up to 21 days from the date the payment was received into your PayPal account. We may release the hold earlier under certain circumstances ..., but any earlier release is at our sole discretion. The hold may last longer than 21 days if the payment is challenged as a payment that should be invalidated and reversed based on a disputed transaction as discussed in the following paragraph below. In this case, we'll hold the payment in your PayPal account until the matter is resolved (but no longer than 180 days)."

https://www.paypal.com/us/webapps/mpp/ua/useragreement-full

Yes it could help. A breach of contract claim would force them to provide evidence that the amount withheld is disputed actually disputed.

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