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Frustrated Because Your PayPal Account Is Restricted? Here's What You Can Do to Get the Ban Lifted

Despite its relatively high transaction fees, PayPal is among the most common payment methods used by Ecommerce stores thanks to its security and flexibility. However, there are also many cases where dropshippers feel disheartened by this platform, mostly because their money is put on hold for an extended period of time. In this blog post, we will discuss some main reasons why your PayPal account is restricted, what you can do to rectify the situation, and how you can prevent it from happening in the first place.


Why are you banned from PayPal?



1. You conducted Prohibited Activities using PayPal


PayPal clearly outlines the activities that are banned from their platform in their Acceptable Use Policy. These mostly include illegal or highly regulated activities in many countries such as transactions involving recreational drugs, ammunition, or ‘get rich quick’ schemes.


2. Your account is involved in a large number of disputes and chargebacks


Two circumstances under which a dispute is raised to PayPal are:

  • Item Not Received (INR)

  • Product Not as Described (PND)



In some cases, you might not even do anything wrong. To illustrate this point, we will present a case study shared on PayPal Community.


“PayPal has banned my account permanently and holds $1900 for 180 days before I can get it back. I sold memorabilia to somebody in person a couple of months ago. The client asked if they could pay me with PayPal, and I said yes. Two days later, [the client] purchased something else under the same conditions. One day, weeks later, I received a message that he opened a case with PayPal saying I never shipped his goods. I explained to PayPal that this was an in-person transaction.

He also reported to his card company. I’ve been using paying for years and have done hundreds of transactions, so I assumed they would treat me well. You cannot reach anyone on the phone because of the pandemic, but they started calling me to collect my negative balance every day. I needed to do an outgoing transaction on PayPal, so I transferred the money into the account that was in the negative and $1900 for my transaction; after getting off the phone with PayPal collections and them assuring me I would have access to my money.

They held the money for three days before permanently banning me and telling me I can’t get my money for 180 days. Now I am out of memorabilia, the money I was paid for it, and an extra $1900 is on hold for 180 days.

The company also emphasizes the fact that your account is restricted does not necessarily indicate that you have violated their rules. They claim that this is for the interest of safeguarding sellers and buyers. Once limiting your account, PayPal will conduct their investigation to reach their final decisions. While some accounts are reinstated, some are permanently banned. In the latter case, your balance might be held for months before you can receive the funds.


3. There suddenly is a significant increase in your cash balance



This happens quite often to many dropshippers, especially those who are scaling their businesses. They find several winning products and are able to sell them in a large quantity, which brings them a huge income. However, this usually results in PayPal freezing their account.


4. Other reasons


Since PayPal refuses to disclose specific reason(s) for their decisions, it is likely that you will never know why your account is banned. However, below are some other possible explanations if you do not find yourself belong to the categories above:

  • You are suspected/detected of conducting illegal or fraudulent activities

  • The verification process of your account is not complete

  • There is a huge drop in your credit score

  • They believe that your account is used by unauthorised parties


How can you rectify the situation?


1. Send them the requested information and documents as soon as you can



Some possible forms of documentation that they need from you for investigation include proof of identity, proof of address, proof of shipment and tracking numbers, and/or invoices from suppliers. If you want them to free your account as soon as possible, you should do this immediately upon being informed. This is why having a system to keep track of your processing and shipment records is important because you can trace back things quickly.


2. Contact them



If you want to get your problem solved with PayPal quickly, the best way is to call them. First, you can try asking them the reason behind the ban, and then explain to them your case. If you are not at fault, offer proof and ask them what you can do to alleviate the situation.


Although following the above steps does not guarantee an unban, they’re worth a shot. Since this is a tiring and challenging process, you should take every measure to avoid getting blocked in the first place.

How can you prevent your account from being banned?

1. Read PayPal’s user agreements and policies


While reading lengthy documents is not the most pleasant thing in the world, you are recommended to take time and go through all the policies outlined by PayPal, especially when a large amount of your cash is transacted through this platform. Once you have a better understanding about their terms and conditions, you should do everything within your ability to adhere to the rules.

2. Keep your account information and particulars up to date


If you have not already done so, you should use a Business account for your dropshipping store. Besides, you should ensure all the documents provided to them are up to date and legitimate, these include business license and registration, bank account, billing address, as well as your name (store owner) and ID cards.

3. Update PayPal about your anticipated cash receipts


When you first register for PayPal as a payment method for your online store, you are required to complete a survey, including the amount of money you expect to receive on a monthly basis. Do spend some time on research and forecasting so that you can give them the best estimate.


Furthermore, if you are planning to scale your business, you should give them a heads-up. For instance, if you are launching several new trending products, inform them of the situation over a phone call. This would minimise confusions and conflicts in the future.

4. Partner up with a dropshipping agent


As mentioned above, your PayPal account might be temporarily blocked under Items Not Received and Product Not As Described. This might actually be the case if you source your products from unreliable suppliers who never ship out your parcels after you have paid them or sell low quality products.

Therefore, to minimise the chance of these happening, you are advised to work with a trustworthy dropshipping agent who helps you to fulfill orders and deliver products of consistent and high quality to your customers’ doorsteps in a reasonable amount of time. This would make your buyers satisfied with their purchases, thus preventing disputes from being raised to PayPal.

Hopefully, this article helps you to have a better picture of PayPal’s rules and some measures you can take to protect your business. If you are busy with taking care of the front-end issues for your dropshipping business, from training customer service team to handling payment issues like PayPal, contact Xianchao Logistics today to get all the support you need. Let us help you with tedious logistics matters so you can focus on growing and scaling your business. With 30+ years of experience in logistics industry and 5+ years in dropshipping sector, we strive to solve your pain points, ranging from product & supplier sourcing to ecommerce order fulfillment, or branded packaging & private labelling to quality inspection & product certification. Please feel free to reach out to us if you need to know any details about partnering with us.

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