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PayPal Problems: Network Marketers, beware of PayPal

It’s been nearly nine months now since Paypal froze my account. My crime? I am an evil network marketer.

Yes…if you are a network marketer with a Paypal account…watch out. And I am not kidding.

There is some fine print in the Paypal user agreement that prohibits multilevel marketers from using their services. If you did not know it was there, you do now. Trust me, you do NOT want to fall into this problem area.

I have tried, without success, to get the account reinstated. I am told that the decision cannot be appealed. YET, I continue to receive emails from Paypal, asking me to come back. Irritating, to say the least. Do a search on Google for people who have had their accounts frozen, many times in an arbitrary fashion, and you might be shocked and amazed. I certainly was.

If you sell items on Ebay, beware. Even if you personally don’t do anything wrong, or violate the user agreement, your account may be frozen, at Paypal’s discretion, for any reason whatsoever. Oh, and speaking of ebay, since Paypal and eBay are one and the same, my eBay account was also frozen, due to the Paypal user agreement infraction. And it could happen to you…

Today, I decided to try a new strategy. It seemed simple enough. I called Paypal’s customer service and politely asked them to simply CANCEL my account. The answer? They can’t do that, because my account has been suspended indefinitely… Sorry, but my brain cannot wrap around that kind of logic.

I can’t cancel my account, but I can’t use the account. Hmmm…

Here’s the problem. Many internet vendors only accept Paypal. So, there are two options presented for payment: the first is with a paypal account, the second is to pay the vendor with a credit card, if you don’t have a Paypal account. In my situation, you cannot do either, unless you are an actual REAL criminal and are using a fake credit card number, not attached to a Paypal account.

Anyone out there had better luck than I have with this reinstatement thing? Please comment here and share with us how you did it.

Now mind you, I don’t ever intend to use the account again. It would be stupid to put my business transactions at risk. However, at least I would be able to make purchases via the Paypal gateway, without being stopped in my tracks, because my credit card is recognized as being tied to a Paypal account.

What should you do to prevent PayPal problems?

1. If you are a network marketer, be careful that you never, ever reveal that to Paypal, even if you never intend to buy/sell services or products related to network marketing.

2. Get yourself an AlertPay account, like I did, and get a verified Business Account.
Network Marketers are welcome at Alert Pay.

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Comments on this entry are closed.

  • isobel akehurst September 7, 2008, 10:36 pm

    Thank you for that information Cathy, I wonder if the Magnetic Sponsoring community and the Renegaders are aware of this problem? Your advice much appreciated.

  • Mike Klingler September 8, 2008, 1:19 am

    In 2003 Pay Pal froze $15,000 and it really cost my business… about 50% of that money they froze was to be used to purchase a service for the clients who paid me. So in addition to not getting the funds I needed to operate my business I had to find $7500 immediately to deliver what I had promised my clients. Then I spent another $5000 in attorney fees trying to reclaim the funds they froze. A year later I got the money and not a penny more even though inflation knocked another few hundred off its value. Let’s not even get into opportunity costs.

    I definitely don’t like Pay Pal.

  • Drikus Botha September 8, 2008, 3:42 am

    I’m so glad I found this post. I didn’t knew that and I think all network marketers should spread the word so that Paypal can experience the real power of network marketing.

    Drikus Botha – Personal Development For Smart Network Marketers

  • Angela James September 8, 2008, 3:59 pm

    Thank you for the information. I have just opened up a PayPal account because, just as you mentioned, many if not all areas of network marketing accept PayPal as the means of payment. I am going to look into the AlertPay and go from there. Thank you again

  • Bob Andolina September 8, 2008, 4:39 pm

    I used Pay Pal for both business, Personal, as well as for my e-bay account for the past 6 years, and never had a problem.

    But I don’t want one either.

    What do others, Isobel, Mike or Drikus, think would be the best answer to this since Pay Pal is like the charge card companies of the off-line world. Can we do business without a charge card these days?

    Instead of focusing on what bad things Pay-Pal did, I think we should all look to how to improve the Pay-Pal system instead for those of us who do a lot of our business on-line.

  • admin September 8, 2008, 5:27 pm

    Hello Bob,

    Yes, I agree that online networkers need a solid, reputable payment solution. Sure, it’s a great idea to improve the Pay Pal system; however, that is Paypal’s choice, not ours. Their user agreement is lengthy, technical and full of potential pitfalls for online marketers of all stripes. I have spoken with several customer service reps and managers about my particular issue. I have been both polite — and angry –and it has changed nothing.

    AlertPay has emerged, to fill the void where Paypal does not wish to do business. A full-fledged, verified business account at AlertPay looks like the best option at the moment…in my opinion.

    There is Google Checkout — but Google Checkout, from what I hear, disallows mlm/network marketing as well.

    As I see it, the best options right now are AlertPay, or an actual merchant account, such as Linkpoint.

    Anyone with a Paypal account, who is also a network marketer…just be careful to never, ever use the account for any business transactions that may smell like network marketing in any way.
    In my case, I decided to upgrade my personal paypal account that I’d had for years, to the Business Account. This is what brought my account under scrutiny.

    Thanks to all who continue to comment here on this issue. It’s helpful to all of us.


  • Bob Andolina September 8, 2008, 9:09 pm

    I use Pay Pal to collect earnings from different affiliate companies I work with who owe me money, and to pay for things I buy from others on-line.

    If I were to sell products on line from my Web site as a Networker might do, such as an E-Book, I would use my own shopping cart such as 1-Shopping Cart instead of Pay-Pal.

    However, all of my product sales so far are all handled by the companies I promote. Maybe that is why I never had a problem with Pay Pay in the first place.

  • Les September 13, 2008, 9:44 pm

    There is only one solution to a problem like this with PayPal and that is competition. Until there are a number of strong international companies seriously competing with them, they can set the rules. Once their own income starts to drop from competition, they will suddenly change their ways.
    Promoting competition is a must.

  • Michael September 16, 2008, 9:07 pm

    Appreciate the heads up about this problem. I don’t sell anything network marketing related but it sounds like if they even find out you have a MLM business, they could shut you down. Scary.

  • Seth Daley September 25, 2008, 12:23 am

    Thanks Cathy for raising the awareness on this issue once again. I unfortunately rely on p-pal too much. Will be making appropriate changes in the near future.

    Seth Daley

  • admin September 25, 2008, 5:03 am

    Hey Seth,

    Thanks for your comments. Yes, it’s easy to rely on Paypal. However, I certainly learned the hard way. And it affects my ability to make purchases, several times a week, since most internet marketing relating products, services, subscriptions, etc. use Paypal.

    Cathy, webmaster

  • Andrei September 26, 2008, 1:17 am

    Three years ago had exactly the same problem, account frozen forever, i apperently still owe Paypal money, i got scammed and never been protected by paypal. Scammer walked away with my items I sold on ebay and the money I got from buyer got refounded. I know I will never get another account or let anyone get one, they do nothing to resolve any issues. Unfortunately for me…

  • Bizarro September 30, 2008, 11:05 pm

    I, too, experienced a similar circumstance. I was out $10K. They still have some of my money. Nice post. Thanks!

  • Boni Courtright May 10, 2009, 9:42 pm

    A year ago Paypal did the same thing to me. I was too honest on my application not realizing they didn’t allow network marketers. They promptly froze my account — would not discuss the matter further and sent emails to me for a year asking me to resolve the matter. They put you in a never ending circle with no way to resolve the matter. I will NEVER do business with them again.

  • Dave May 20, 2009, 11:58 am

    I also had a paypal account frozen a few years ago, and never got my money, which luckily was not much. I had made it a habit to withdraw from my paypal account frequently after hearing horror stories. The thing that to this day REALLY gets me is they never would tell me specifically why they froze it, only a canned response about violating their acceptable use policy be selling inappropriate items, which I did not do by the way, only a few typical things on ebay and ebooks and subscriptions on a couple of websites. It really scared me that a company as big as paypal can do whatever they want and do not have to even tell you specifically why. If it had been more money, i would have consulted an attorney, however it was so little an amount that I never did.

    I have an Alertpay account, but have not used it much. They still do not accept CC’s even though for a long time the option was on their payment page but didn’t work and you have to fund your account. I think they are a good option and I may try them for a multi-tier affilaite program I am looking into, but still would like more feedback on alertpay. I tried to call their customer service a few times a year ago and always had to leave a message. Never did talk to a real person. Thatmay be better now though.. they were fairly new then. Anyone else had experiences with alertpay????

  • aNOTHER VICTIM September 29, 2009, 5:40 pm

    I had a regular store on ebay paypal frozened my account w/ $400 dlls on, & is not leting me cancel my add or nothing, I can´t close the store until paypal unfreezes & still they expect me to ship the items, is really a no win situation, Whyyyy iin the heck do they think ill ship so paypal keeps the money??? make no sesnse , so I refunded each person & I a not shipping anything until they unfreeazeme , people have been VERY nice & caring they ALL have heard about HORROR histories like me,I POSTED ON FRONT ON MY STORE THAT PAYPAL & EBAY are useless, & TO DO NOT PAY!!!, I am quite happy that i canceled my back acccount & they cannot withdrall a cent from me , so they can´t keep going whit their charges, IF THEY DONOT ALLOW ME TO cancel my account WHY on earth will I keep paying!!!!

    Be aware Ebay & paypal, are the ssame aol thing , more & more politics, I Had 100 % feedback, IS USELESS!!!! if you let paypal or ebay to suck on you like a flea, they will always post your items, but if not…. poor you.

    until this day I still need to get verified!!!!, after I fullfil all their non sense request, like sending id, trackings, address ” verification” I always will be …forever in review, I caled 2 times customer care… they are not customer care !! they are the most MEAN people on heart!!!! is like talking to the wall!

    WILL NEVER HAPPEN!!! move on!!!! REFUND, Close your banck account, and i learn the lesson!! THEY ARE NOT A BUSINESS they are like a monopoly!!! be aware please!!!!

  • pla November 16, 2009, 5:22 am

    thank you for this info..i am about to open one whit paypal.. so which one should i go for that has the least problem?

    • admin November 20, 2009, 11:20 am

      I suggest that you try AlertPay. I have been using their service for over a year now and have experienced no problems.

    • admin November 22, 2009, 10:56 am

      I recommend that you try AlertPay.