Be Careful With PayPal!

PayPalMany people want to sell our products and use PayPal to process their customers credit cards. However, I would warn against using PayPal as your only means of processing credit cards.

There have been instances of PayPal freezing distributors accounts because they sold certain products. Below is an excerpt from the email sent out by PayPal:

“I found several items which violate PayPal’s Acceptable Use policy regarding Firearms, Weapons, and Knives policy, as well as PayPal’s Surveillance Equipment policy.

If you choose to remove the prohibited items from your website, you will need to remove the following items:

Stun Guns, Butterfly Knives, One Hand Opening Knives, Pen Knives, Telescopic Steel Batons, Sling Shot, Throwing Stars, Telephone Recorder, Cell Phone Recorder, and Conversation Recorders.”

The accounts were frozen then the email was sent.

The following information shows the difference between PayPal and a merchant credit card account.

With a Merchant Account, your funds are directly deposited into your personal or business bank account, which you control and which is also protected by Federal Banking Regulations.

With PayPal, your money is deposited into a PayPal Account, which PayPal fully controls. Since PayPal is NOT a bank, they do not need to follow federal banking regulations. These regulations are designed to help the average person avoid issues like having their bank account frozen for weeks or months with no explanation.

“Who would trust their money with a bank that could do that?”

Sadly, Paypal routinely freezes its customers’ accounts for almost anything and without warning. Once an account is frozen, the funds are often held by PayPal for months on end with absolutely no recourse for the merchant.

A domino effect occurs when a PayPal account is frozen, leaving the merchant with no way to fill orders. Those orders are then disputed by customers, creating more chargebacks and the illusion of fraudulent activity on the part of the merchant.