How To Avoid Losing Your PayPal Account

PayPal is now 13 years old. Over PayPal’s history there have been many horror stories of of people losing their accounts. The vast majority of these stories are from people that simply didn’t know the proper way to handle certain transactions – and yes there is a certain way to go about it that’s not documented very well.

If you follow these unofficial guidelines with your PayPal account, it will dramatically decrease the chances of losing it.

You will notice that the tips below do more or less follow along the same way you’d handle a traditional debit or credit card.

Tip 1. Don’t go cancel-happy.

Retailers hate returns because they lose money every time it happens. PayPal also doesn’t care too much for people that have a history of cancelling more than they spend.

If for example you purchase 20 items in rapid succession, say one item per day, and then cancel the transaction on 15 of those items, that will send up a red flag at PayPal.

Doing this won’t necessarily get your account cancelled, but it does put your account into "being watched" territory. This is especially true if a retailer you cancelled an order from decides to get nasty and report you.

Tip 2. Receiving a lot of money in a short time? Tell PayPal.

This is the most common horror story concerning PayPal. Let’s say you decide to release a for-sale item on Lulu and use PayPal and your primary means of receiving payment. Your item does very well and you start raking in a lot of cash.

Then all of a sudden – freeze. You can’t access your funds and are locked out.

What happened is that, according to PayPal, you made money too quickly. The reason they do this is because rapid high-volume transactions can indicate you’re a drug dealer.

I’m not kidding.

The way around this is simple. If you notice that you’re making a lot of money in a very short period of time, tell PayPal. Contact PayPal support and inform them why you’re making money as it’s happening. This will greatly reduce the chance of your account getting locked out. They will mark your account appropriately as saying yes, you did call, yes you informed them about the incoming high-volume transactions and to not lock the account because of it.

This is basically the exact same maneuver you do whenever you’re going to spend a large amount of cash on a credit card, except in reverse. If you were going to spend $1,000 on a purchase, the smart thing to do is to call the credit card issuing bank first to tell them you’re going to do it? Why? So the charge goes through. With PayPal, if you see "the wave" coming in with a lot of incoming transactions, inform them appropriately. They will sincerely appreciate it and you can continue to use your account as you normally would.

Tip 3. Don’t use PayPal to accept donations

This is the second most common horror story from PayPal users. They set up a donation link, a bunch of donations come in, and… freeze. It’s the exact same thing that happens when a lot of cash comes in from a for-sale item.

The unfortunate part here is that even if you tell PayPal in advance a bunch of donations will be coming in, that usually won’t help you, your account will still be frozen and you’ll probably lose it ultimately.

Who’s to blame for this? People who have abused the PayPal donation system over the years. There have been way too many people who have jumped on the donation bandwagon that have used the incoming cash for anything but what they said they were going to use it for. As such, PayPal these days has very strict internal rules on how donation issues are handled. If the volume gets too high, the account is locked, period. It is a "shoot first, ask questions later" way of handling it – but unfortunately they have no other effective way of going about it.

If you want to know what alternatives there are to PayPal, here are a few:

• Google Checkout
• Money Bookers
• Paymate
• OboPay
• Amazon Payments