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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before