There's no magic to Paypal's cash freeze trick

Matthew Wright was shocked when he was told he'd have to wait six months for his money.

E-money pioneer PayPal has been up to its old trick of freezing innocent people's accounts putting them into financial difficulties in the process. This time it was Independent reader Matthew Wright, a professional magician, who was the victim.

"I am a small, one-man business so don't have access to lots of cash," he said. "PayPal's actions put my business in shreds and forced me to borrow money to pay my mortgage."

The trouble started when Matthew invented three new tricks that he sold to a large magic wholesaler, a very well-known and respected firm across the world.

That was cause for celebration, especially after the company paid the money they owed – £12,000 – into his PayPal account. But then Matthew got a big shock.

"PayPal decided that I was a major risk account and withheld €4,000 (£3,397) in reserve. I was told that I couldn't get any access to the money unless I close my account and then it would only be refunded after 180 days."

Matthew was astounded. "Surely this is criminal, he said. "How can they get away with it?"

It's not criminal. PayPal acts in this way to fight fraud and criminal activity. When it sees unusual transactions – such as the much higher than normal amount flowing into Matthew's account – they are flagged as possible, high-risk transactions. The company's standard response then is to freeze the cash pending an investigation.

How long should an investigation take? Under PayPal's terms and conditions, they can keep cash for 180 days. But logically you'd expect that once provided with evidence that all is above board, they would release it.

In Matthew's case, it took The Independent to get involved before PayPal saw sense. After our intervention, the company has handed over Matthew's cash, allowing him to carry on with his business.

Matthew was also told he could not appeal against the decision for six months. PayPal admitted he should not have been told that.

The company explained: "PayPal's risk systems flagged Mr Wright's account for review after a number of unusual payments were received.

"Unfortunately, the agent who reviewed the account misunderstood the nature of Mr Wright's business, and as a result applied reserves that were not justified by the low-risk nature of the business."

In the past, The Independent has reported several cases where people were left disadvantaged by PayPal's bizarre policy of locking cash away for six months even after uncovering evidence that all was well.

In one extreme case, dogs looked after by a rescue service faced being destroyed after PayPal froze the company's account. But after The Independent's challenge, the firm unblock the cash.

After the latest blunder it has agreed to finally act. "We're reviewing our procedures in the light of Mr Wright's experience," PayPal said.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all