More insanity on PayPal

I have noticed that sellers who use PayPal on eBay are now asking  for positive eBay feedback from the buyer before they send the item out. This is because PayPal appears to have a new policy. Basically, it  prevents you from withdrawing the funds for 21 days unless the buyer leaves positive eBay feedback.

As I mentioned in my previous posting, I have sold a couple of items in the last few weeks. This payment delay has happened twice. The feedback mechanism works on goodwill: users only leave feedback if they had a genuine experience they want to share with other buyers. If people only leave feedback in order for the seller to ship them an item then the feedback mechanism is nonsense.

Now two weeks ago, after I had made an eBay purchse and paid in full via PayPal, the seller explained his situation, which I sympathised with. He suggested three options: Either I leave positive feedback first; or he cancel the auction or I pay in cash.

We decided cash was the best option (I wanted the product). The seller refunded my transaction in full, we met and I exchanged cash for my purchase. When I finally met the seller it occurred to me how utterly useless PayPal is at mirroring the way people do business. The seller seemed a genuinely nice person: I certainly trusted him enough to part with the cash.

It looks like PayPal has gone bonkers. It has Buyer Protection, so why is there a need for this additional barrier, which prevents legitimate users from getting timely access to their funds. I’m sure  PayPal’s policy contravenes UK banking legislation.  I can’t see how much of a dent this will make on its efforts to combat organised crime. Such behaviour only hurts the little people, like you and me.

There is a real opportunity for someone to develop a better payment system, one that uses real people to make risk assessments, rather than the idiotic one used at PayPal which appear to rely on seemingly random assumptions about fraudulent transactions, that have no bearing on the way business is conducted in the real world.

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I would assume the reason for these changes are mostly to protect buyers from hacked accounts. Romanian scam artists frequently hijacked high feedback accounts, posted many items on eBay that didn't exist, took PayPal and ran with the money. PayPal would not refund buyers in this case because the scam artist would have already drained the money and run (PayPal only gives back what it can recover ... read the fine print).

Overall I believe this is a good change but you are going to run into cases like this when people don't trust PayPal (understandable) or are new to eBay and don't understand what is going on.

Don't forget the impact this will have if ebay requires pay pal as the only accepted form of payment as they have said was going to happen. Also don't underestimate the power of all those small amounts adding up to earn pay pal an extra 21days of interest.

Paypal is now pretending to be an Escrow service. Only problem is that they are not licensed as one. Just a matter of time before there's yet another class action suit over yet another illegal policy.

Easy, when the paypal payment comes in, refuse it. Appoligise to the buyer, explain that (like them) you wouldn't send out a product before having the payment and ask them nicely if you can send them an invoice.

Job done :-)

I think most experienced sellers who have been around awhile knows the skinny on this and other policies Ebay has recently brought out. This is to hold money and gather the interest off the top of it for themselves. The paperless checkout is for ebay to gather more paypal fees. Pushing free shipping is so that sellers will raise the starting price to help cover shipping and ebay will come along and charge fees on that extra price! In EVERY case, ebay benefits - in NO case does the buyer benefit - and once again the sellers are skinned for more money! Those are the REAL reasons why the new policies and Ebay is only fooling themselves if they think they are fooling us!

Nice post Cliff and one that sums up nicely the position of small low volume sellers and their customers.

However, imagine the nightmare of escalating that experience 100-fold in a month for a low level PowerSeller, or even 1000-fold for a medium sized one.

Even after almost six years on eBay, with four continuously as a PowerSeller, and the same PayPal account for five years, fully identity and address verified as per the EU anti money-laundering rules etc etc.

I still see warnings on around 15-20% of listings that PayPal may exercise the 21-day holding - this appears to be product category related, but in the most ludicrous categories; normally fast moving consumables (e.g. foodstuffs and stationary etc).

Not sure what planet eBay + PayPal are on when they decide policy, but I'm wondering if they remembered to obtain their Consumer Credit License from the Office of Fair Trade for acting in a credit reference agency capacity - PayPal telling eBay about buyer and seller financial information.


To clarify the PayPal policy, the funds will be released within 21 days of the payment or within 3 days of being left positive feedback for the transaction. If you are shipping in a timely manner the item should be received and feedback posted and the funds will become available within a week of the sale. If feedback has been posted and you want the funds to clear sooner, you just need to call PayPal's service number and they'll release it for you. It's really not a big deal, and I've never had any funds held for the full 21 days.

It can be kind of a pain, but as long as you're offering the services of PayPal you need to play by their (sometimes strange) rules.

I walked away from ebay earlier this year. It has hurt me as I am disabled and fighting for SSI. However I no longer felt that ebay was what ebay started out to be.

This punish the seller attitude plus the PP or CC only rule, 21 day hold, etc etc pushed me over the edge.

I am praying that one of the alternates, esp, will surface as a viable rival to ebay.

Until then I will list where I can and get what I can.

If only other would do this en masse maybe the old ebay would come back. HA pipe dream I know!


Hi Garry

I have been speaking to a law firm about anti-money laundering. I will be posting on this later. It does appear to be something PayPal has to do - but there must be a better to do it.

I agree. ebay was set up to make it easy for people to buy and sell. Even if they need these policies, PayPal should have a better way of dealing with people.

Yeah, it's funny how the fees quickly add up. PapPal is supposed to offer a safefy net for buyers and sellers, but I think people will turn away from using the service if it continues with this ludicrous policy.

Perhaps it's a communciations issue. But PayPal must educate users. It needs to be much more focussed on its customers. In my opinion, it relies too heavily on automated systems, and let's face it, computers aren't good at dealing with the complexities of human behaviour.

Notice to Paypal...

I will no longer be using your services, you are too expensive and this has pushed me over the edge.

Moneybookers here I come

I got wind of your article on Auction Bytes. While you are in the U.K., it is important for U.S. readers to understand that PayPal is not a bank and it is not FDIC insured. They are not legally obligated to act as a bank and so you are at their whim when you conduct transactions on PayPal.

There are a number of ani-paypal sites out there as well as a number of PayPal alternatives. Please check out my list:

M.C. Nygard

Former Platinum PowerSeller

Its not a PayPal Policy - It's an eBay One

Pure speculation and wildly inaccurate