PayPal “Frozen Funds” Issue Could Soon be Solved

If you ever had your PayPal funds frozen, then you are probably amongst those that are reading this article. I know I had mine, but not for quite a long time, because my funds were frozen for my own security, since somebody was trying to breach into my account. We’re talking about changes that could be made to solve the issue with the very long frozing time.
A recent article on CNN talks about the possibility of some radical, positive changes being done to this issue. PayPal’s system is designed to fight fraudsters and to provide a very secure and safe platform to buy and sell things online. But sometimes they also make mistakes, as it was the case, so many times, with conference or event organizers that used PayPal to process ticket payments. In fact, there are many, many stories about how horrible was the experience with PayPal’s clumsy policy regarding frozen funds.

PayPal frozen funds issue: frustrated users

What happens is this – whenever PayPal feels that there is a fraud risk, it routinely freezes the funds for 21 days. This is not that scary, right? 21 days isn’t that bad, one would think. But, when you signed up for a PayPal account, did you read the entire agreement (of course you didn’t, nobody does) ? Well, PayPal has the right to freeze your funds for as much as 6 months – 180 days. So, imagine organizing an event, fundraiser, conference and realizing that your money is out of reach.
I know people that use PayPal to accept donations for sick, cripple kids. Imagine the despair of the parrents when they realize they need the money but they can’t use it. Why? Because PayPal then asks for A LOT of paperwork that could prove you have the previous experience of a product seller. And if you do manage to gather all the evidence and documentation to prove that you’re playing fair, even that might not be enough. That’s the reason why there are so many hateful websites and web searches already with regards to this.
The matter of “PayPal frozen funds” has gotten even more publicity when Science Fiction author Jay Lake tried to raise money via PayPal to fight its colon cancer. His fundraiser went viral and quite soon, he gathered $20, 000. This made PayPal’s system “suspicious” and he found his account frozen:

They wanted me to provide receipts, shipping information, business paperwork. That obviously didn’t apply to me, but there was no way to bypass the process. I called, and they said appeals take 24 to 72 hours to get going. I asked, ‘How I do prove I’m not conducting transactions?

And there are many other examples. I find it quite shameful that only now did PayPal decided to take some action. And even now we’re not sure what they’re going to do.

They want to make it right

Why now? Well, maybe perhaps there’s a lot of competition. PayPal had the luxury of making this huge mistake before, but not anymore. I realize that those who had the misfortune of having their funds frozen will never, ever use PayPal again. And in this age where information spreads so rapidly, they’ll do what it takes to inform others. But, apparently, PayPal wants to prevent that and to straight things up.
PayPal’s director of communications, in his short talk with CNN representatives, told that there are going to be some aggressive changes in 2013. He also added the following:

We want to be clear about how people can get out of the frozen funds situation. We need to get better about helping people, or explaining why actions are being taken. We’ve made a commitment to be clearer with consumers on how they can get out of these situations. We’re fixing a lot of that.
At a minimum, the fact that someone needs to mail in something to an online payments company is a problem. 2013 is going to be the year that we fix a lot of those pain points. We are committed to getting back to being the center of our customers’ financial lives. PayPal’s Nayar pledged. Big changes are coming.

Let’s hope that PayPal won’t simply inform users that they need to be cautious before receiving a lot of money in a short while of time. They need to ease the process and to reduce the amount of paperwork, but in the same time, to be able to maintain restrictive, Cerberus-like fraud filters. If they don’t manage to do this, users will simply walk away.