Paypal holds back your money. Is that legal?

[Rob-F]

I notice that Paypal only lets you draw out $500 per month--unless you agree to give them your social Security number. Is that legal? Seems to me that my SSN is between me and the government. I wonder if they have ever been challenged about this.

 

[Brian Legge]

Why would it be illegal? They're a private company with public policies... not a bank. I'd be surprised if there was much regulation here.

 

[Rob-F]

Illegal because my money belongs to me, not them. It seems to me they hold our money hostage unless we do what they want.

 

[Bill58]

Who knows, but maybe it's some IRS or DEA.....or both regulation.

 

[nobbylon]

Is it to stop money laundering scams? I had a limit on my account until I jumped through some hoops. I dislike paypal for all the right reasons however some buyers seem to think it gives them some kind of protection. In reality this protection is limited at best. I've found it's far better to build up trust and honest practice and stop paying ridiculous fees and scandalous exchange rates and just use wire transfers.
I do accept paypal but it's not the best and probably the dearest way to buy and sell.

 

[Frontman]

Paypal and eBay have to comply with federal tax laws. Uncle Sam wants his cut of any substantial eBay sales, or other money transferred to you. This is called "income", and any significant amount must be taxed. For every extra $1 they can collect in tax, they will be able to spend $5. I wish I could spend the way they do and not end up in jail. Of course, if you don't give them their cut, you could end up in jail.

Paypal must give the government records of your transactions if it is requested of them. Make sure you are filling out a 10-99 if you are getting significant money through paypal.

 

[Chriscrawfordphoto]

Paypal and eBay have to comply with federal tax laws. Uncle Sam wants his cut of any substantial eBay sales, or other money transferred to you. This is called "income", and any significant amount must be taxed. For every extra $1 they can collect in tax, they will be able to spend $5. I wish I could spend the way they do and not end up in jail. Of course, if you don't give them their cut, you could end up in jail.

Paypal must give the government records of your transactions if it is requested of them. Make sure you are filling out a 10-99 if you are getting significant money through paypal.

You do not fill out a 1099 for that. The 1099 is a form used by businesses that pay contract labor to report to the worker and the IRS the money paid by the company to that worker. If you're making money from selling stuff online and getting paid through Paypal, then its just regular self-employment income, reported on Schedule C with your 1040 tax return.

 

[David Hughes]

Hi,

If you agreed to their T&C when you signed up then it becomes legal as you agreed to it...

Regards, David

 

[Sejanus.Aelianus]

I think you'll find it's anti-money laundering legislation kicking in, as Nobbylon suggested. Banks have to report transactions in excess of $10,000 in the US and £2,500 in the UK, between parties, where one or other is unknown to the bank. Unregulated money transfer companies, such as Paypal, have much lower limits.

To avoid this happening, you must go through individual verification, so that the money transfer service can show that your identity has been proven to a statutory standard.

 

[citizen99]

Yes, the money-laundering regulations led to the limitation on my account after a sale took the total over the trigger point. When initiating the resolution process through paypal's on-line system, the automated response is that they will get back to you, and they are in *no hurry whatsoever* to do it while they have your money. :bang: .
Their on-line system is designed to keep you away from any human operative. However if you google around for contact points, you should find them posted on-line amongst all the paypal 'horror stories'. E.G.

http://www.screw-paypal.com/paypal_contact_information.html

Try sending your request to whichever office is applicable to your region of the world. In my case it soon got a helpful response from a human being. Quote all details of the automated Webform response - I copied & pasted it into the email.

 

[Gabriel M.A.]

If you agreed to their T&C when you signed up then it becomes legal as you agreed to it...

Note to self: create startup with T&C granting me exclusive rights to all users' property. 😎

 

[aad]

The SSN requirement for withdrawals over $500 is to comply with federal regulations-any proceeds over $500 or 600 processed through any bank/payment processor require taxpayer ID information (your SSN) and the payments are reported to the IRS.

In fact, any vendor or service you use may fall under this regulation.

The money laundering part is also valid. So-yes, it is your money, but yes, they MUST have your taxpayer ID if you wish to use their service-or accept credit and debit cards, for that matter..

 

[willie_901]

Hi,

If you agreed to their T&C when you signed up then it becomes legal as you agreed to it...

Regards, David

Question answered, issue resolved. Find a different service with T&C acceptable to you.

 

[thegman]

Question answered, issue resolved. Find a different service with T&C acceptable to you.

I'm not sure if that is strictly true, just because something is in a contract, does not make it legally enforceable, necessarily. In the UK, some companies were offering "pay day loans" at very high interest rates, the terms and conditions were signed, and presumably understood by their customers, but courts still found the terms to be unfair, and they were voided.

I agree that if you don't like the terms, don't use the service, but that does not mean the terms would be found legal in a court of law.

 

[Out to Lunch]

I am also stubbornly sticking to international bank wire transfers. With the use of the IBAN, or "International Bank Account Number", transfers are easy as pie both for the seller as for the buyer and vice versa.

 

[Sejanus.Aelianus]

but courts still found the terms to be unfair, and they were voided.

There is also the Unfair Terms in Consumer Contracts Regulations 1999, but that applies more to "Conditions of Sale".

 

[Faintandfuzzy]

Illegal because my money belongs to me, not them. It seems to me they hold our money hostage unless we do what they want.

And the service gelongs to them. Kind of lie complaining about a phone canpanies and legitimizing it by saying you own the phone. If you dont agree with the rules, go eleswhere.

 

[Gumby]

You do not fill out a 1099 for that. The 1099 is a form used by businesses that pay contract labor to report to the worker and the IRS the money paid by the company to that worker. If you're making money from selling stuff online and getting paid through Paypal, then its just regular self-employment income, reported on Schedule C with your 1040 tax return.

or if it is just "private party selling of old stuff"... Form 1040, line 21. "Other income. List type and amount".

 

[Ron (Netherlands)]

Why would it be illegal? They're a private company with public policies... not a bank. I'd be surprised if there was much regulation here.

Here in Europe they have a banking license and are a bank

 

[Ron (Netherlands)]

I am also stubbornly sticking to international bank wire transfers. With the use of the IBAN, or "International Bank Account Number", transfers are easy as pie both for the seller as for the buyer and vice versa.

never did a US-Euro transaction? 🙄

IBAN doesn't protect you nor as seller nor as buyer....