>It’s a very unethical practice because it ends up hitting businesses at the worst possible time, when the termination or suspension causes a huge financial hit.
You forgot the part where Paypal get to keep your money when they close your account. And it's not like they only keep it temporarily in case of lawsuits/chargebacks, they just keep it forever. I still can't believe that crap is legal.
Are you saying you should empty your account constantly (nightly?) in case paypal gets shut down your account, for unknown and un-communicated reasons?
> Are you saying you should empty your account constantly.
When I was involved with taking payments through paypal that's what we did. For us there was no value in keeping payments in there but there was plenty of risk. We stopped using them very quickly though, their fees were ridiculous.
>Are you saying you should empty your account constantly
This doesn't really help. When you link your bank account with PayPal the link is 2 way. I.e. PayPal can, without any input from you, transfer money out of your account. They can even do that if the account is empty. Your bank will almost certainly allow an overdraft on your account and you're still liable for the amount + overdraft fees.
I had some issues with PayPal about a year ago and a senior rep at my bank talked me through these details.
With my bank, it wasn't even possible to turn off the overdraft feature.
You can upon sign up of any bank account not allow overdraft. In fact it is an opt-in feature, that depends on your bank they communicate properly with you. I have for instance ensured there is no overdraft added in our business accounts.
Or perhaps I am missing something here?
But yes, please remove overdraft from your accounts. I have no input to offer on paypal at this time.
P.S. Are you in the U.S.? I am just really surprised they bank deemed overdraft as a necessary feature in your case. I am personally interested in this case.
Not quite the same situation here, but overdrafting is a rather nasty feature in my experience. As a student I used a debit card to simplify my banking do I wouldn't have to think about how much money is in my account (if I'm unsure, simply send a text to get my balance or transfer); if I didn't have enough money in my account to buy a $10 lunch, then I wanted my transaction to fail, for budgeting reasons. This didn't work for two reasons:
1. Overdrafting. My bank would not allow me to turn off overdrafting on my checking account; any money in my savings account would be used to cover an underfunded purchase from my debit card, causing a $25 fee and there was nothing I could do about this, short of closing my savings account or reducing the amount of money in it. Since free checking was dependent on a linked savings account with $500 minimum balance, this wasn't an option. The overdraft/fee could cause the savings account balance to go below the minimum, and if I didn't notice I'd get a $25 fee for my savings account as well.
2. The school would constantly charge my debit card as a credit card, and the transaction wouldn't appear for up to two days. Doesn't really help me keep track of my balance when transactions don't show up. Cashiers at the student store could usually process the card properly, but every time I bought something to eat at the cafeteria it would process as credit, regardless of what I told them.
Today, I think bank policies have changed (though I switched banks before this) and I believe you can disable overdrafting on most large banks (WF and BofA, anyways)
Yes, absolutely. Some banks offer "sweep accounts" that do this automatically. If they have to come to you to claw back some money, they're more likely to tell you why.
You know what's better than learning from your own mistake? learning form other people's mistake.
If you login during a vacation overseas and get your account locked, they keep everything in it. Doesn't matter if you never did any transactions yet and all that money is yours from the bank account you linked. If you get banned, you lose it. Getting your account and/or your money back is about the same level of difficulty as getting unbanned from a google account. It's not impossible, but be prepared to take them to court.
If you only use PayPal to purchase things online, the protection is great, but you don't want to be on the other end of that transaction.
I've had my Paypal account frozen because I was cheating by living in a different country, not just on holiday. I managed to recover it by giving them the documents they wanted to "prove" that I lived in the country my account was in. I think this included getting my bank to send statements to a family member's address and have them email me a copy. I know some people really do get locked out for good but that wasn't my experience.
Trying to get money from a real bank account (Lloyds in England) after moving out of the country was much harder though. It involved writing several letters and getting a policeman to stamp something, as well as multiple phone calls, including to several staff who gave me wrong advice. But still, they returned my money eventually.
You forgot the part where Paypal get to keep your money when they close your account. And it's not like they only keep it temporarily in case of lawsuits/chargebacks, they just keep it forever. I still can't believe that crap is legal.