Paypal's rights to hold transactions?

[Finexe]

Here is our correspondence with Paypal. Does someone here know the legal view of this. Can we hold them responsible? Below is our conversation with our client and with Paypal, due to funds being on hold. Their action caused us to lose domains, to extra work etc. See below:

Customer:

> I buyed some domains, seller deleted domains and
> suspended my account.

We:

This dispute has arised as paypal put a hold on 4
> transactions to us
> today,
> this being one of them from this user. The
> transaction IDs are:
xxx xxxx xxx xxx
> We have not got paid, it has been a direct violation of
> our terms of services by doing a chargeback or otherwise be responsible
> for reversed transactions.
> Therefore we have retracted this item. The client
> owes us $251.38 of
> held/placed transactions. And now even
> administration costs as we have
> tried to restrict our losses.
> Could you tell us why you have made us all this
> trouble today? Did you
> really believe that you could get away with
> registering domains,
> reversing
> the transactions at paypal and still keep the
> domains? We have lost
> money
> because of this and consider this a fraud case.

Customer:

> Hello, I don't know why paypal reverse 4 of your
> transactions. Now
> paypal
> want that I fax some documents to paypal which
> verify my adress and
> identity. I will fax those document to paypal
> tommorow. I did not ask
> paypal
> to reverse the transactions and it was not my fault.
> It was very
> unresponsible of paypal to reverse the transactions.
> I would apreciate
> if
> you e-mail me bofore you suspend my account. I hope
> it will be solve
> soon
> and you get your money back which was hold by paypal
> unresponsibly

To Paypal:

> Original Message Follows:
> ------------------------
> Today, 4 transactions submitted to us were put on
> hold, which resulted
> in
> many man hours for us trying to cut our losses.
> Communicating with the
> customer, he does not even know why, he has not done
> charge back or
> anything
> alike. It seems Paypal is responsible for our loss
> today. If the
> customer
> was he would need to pay our administration fee, now
> we are asking you
> to
> please explain the exact circumstances. Either the
> customer is
> responsible
> or so are you and somebody should cover our loss

To Paypal:

We have contacted the customer and they say they have never questioned the transactions before they were held. But both the customer and we have
suffered economical loss now due to your action. Who is going to pay for
this? I have filed a complaint to your executive. You should pay for our
expenses, one customer representatives work for 3 hours. And the items sold
may be unretrievable for the customer as they were deleted. Please explain
to us why you have put hold on our funds without any complaint from the
customer!

Paypal:

> You received funds that were reported to be
> potentially fraudulent. In
> other words, we have received notice that the holder
> of the originating
> account may not have made the transaction, be it
> from a credit card,
> bank, or PayPal account.
>
> While we investigate the legitimacy of the funds in
> question, they will
> be placed into a temporary hold. Therefore, these
> funds will not be made
> available to you until we are able to verify that
> the funds in question
> are legitimate. If you have already used these funds
> for another
> purchase through PayPal, or if you have withdrawn
> these funds you may
> show a negative balance for the amount in question.
>
> If you have any further questions, please feel free
> to contact us again.

WE:

Dear Paypal,

When you say that you have "received notice", from whom have you received this notice? Our customer says he has not done anything or questioned the transactions, but that you have put them on hold without their knowledge. And that you have asked him to verify his account, which he promises to do today. Please explain exactly what you mean by "we have received notice"? Who has given you this notice? You are responsible for our loss, and I want a proper explaination to your action.

 

[Corey Bryant]

Unfortunately you are at a loss until Paypal works thru everything. Make sure that you have faxed them over everything as they request it and document it.

When you say the customer has not contacted Paypal, how can you be so sure? Using Paypal, you have just added another party to the credit card transaction (there are already the issuing bank, the consumer, the merchant account provider, the transaction provider, the electronic payment gateway, the aqcuiring bank) to name a few. And now adding Paypal, they have to protect their money because the merchant account provider is going to get it from the acquiring bank to send it back to the consumer if needed.

 

[Finexe]

As I understand it, they are claiming they are reassuring his account is not unproperly used by a fraudster. There is no issue of a bank retracting the money as I have understood it. I cannot be sure, but assuming the customer tells the truth, then paypal has acted on their own to verify him/make sure of the funding, but by holding transactions they have done damage to us. Paypal is claiming they have been "notified" of the account holder not being the one who has spent it. Again, since the customer claims he will verify himself today, and that he has not claimed such a thing, paypal seems to be the one causing all the trouble, that's why I demand that they tell the truth and shed a light over what has happened.

My question is do I have legal rights to claim explaination and compensation? (which I think I should have)

 

[March2005]

This would take more of your time, but you could research your potential customer to see if they are trying to scam you or not.

 

[Finexe]

Actually we did a research, we did contact them prior to the order through their registered paypal account ONLY, and verified the contact info is legit etc. My question is, asuming the customer is NOT trying to scam or has done anything wrong, can we hold paypal responsible?

Paypal has replied:

As per our Privacy Policy, please understand that under no cicumstance
can we let you know for what reasons we are investigating these
transactions.

However, please note that we only put a hold on transactions we
investigate such as Buyer Complaints, Unauthorised Transaction reports
from the owner of the funding source used, chargebacks and payments
made
with Fraudulent Funds or from an account not authorised to send funds.

As you would have been informed of any complaint or chargeback filed,
only the remaining options are a possibility.

please note that as per our User Agreement, we do not
cover
loss of funds due to any such investigation - even in the event the
funds are eventually returned to the rightful owner of the account/
funding source - as you are not eligible for Seller Protection.

It seems they are hiding behind privacy policy. How legal is this if they can do damage to your business at will, and only refer vagely to "we have been notified" etc, when there might actually be noone else than themselves trying to cover themselves by verifying a credit card payer??

Please help, is there a lawyer here?