PayPal woes

For the past month or so, my PayPal account has been frozen. I have been unable to transfer money into or out of my account.

This normally wouldn't have been a big deal, because I hardly ever need to use my paypal account, except that the day before it froze, I transferred $700 into it. You see, for the last three years I've been using my paypal account to electronicall transfer most of my bi-monthly paycheck from my bank in OKC to my credit union back home, which actually has an interest rate.

At first, I wasn't sure what to think - I mean, security is a good thing, right? So it would behoove me to play be their security rules, right? Well, probably.

PayPal wanted me to do three things to "secure" my account before they would unfreeze it: Change the password, change the security question, and 'validate' the credit card hooked with my account.

The first two were easy - It had been a while since I had updated either my password or my security question, so I was glad to do so. The third one, however, was a bit different. I wasn't the one who hooked the credit card to my account. I'm pretty certain that PayPal got my card info from my bank, and took the liberty themselves to connect the two. My theory is that this was done for security purposes - I think it's possible to make an instant transfer from paypal to someone else, then take the money out of the bank before paypal gets to it. Since the transfer is instant, the recipient gets their money before PayPal takes it from your account, and PayPal takes the hit. Consequently, they want a credit card connected with your account so they have the security of knowing that even if you don't have the money, they can get it from you.

I don't necessarily mind this, but now my credit card is hooked with my account, and PayPal will not let me unhook it. Additionally, they wanted me to authorize a $1.95 charge to the card so they could confirm that the right person had access to the bank statement - the $1.95 charge would have a number in the transaction detail on the bank statement, which you would enter in to verify the card.

The next step was the one that got to me: When PayPal said it needed to charge my account, it said it would refund the $1.95. After I authorized the charge (hey, I wanted my $700 back) and entered in the verification numbers, I found out that I would get the money back in the form of a $1.95 credit on by next PayPal payment - NOT as a refund, NOT as a credit on my account, but as a credit ON MY NEXT PAYMENT! I hardly EVER make PayPal payments, and now I have $1.95 tied up there waiting for that elusive next payment.

I know it's only $1.95, but it's not about money, it's about the principle of the thing. PayPal essentially took charge of my account, and wouldn't give it back until I payed them. Oh sure, I get the paymeny back... but only sometime in the future, and even then, the payment stays in the system, probably in a non-interest-paying account like mine was.

This experience has helped convinced me that my new technique for transferring money is a better way to go: Ing, Direct - 3.00% interest rate, no minimum balance requirement, Transactions by phone (much more important to me now), Has a few (ok, 2) brick-and-mortar locations, and up to three checking or savings accounts liked to it. It also allows you to set up direct deposit with your account, So I'm going to skip the transfer step of depositing my checks in the local bank and have them go straight to my Orange Savings account.

What an experiance.


- jhj