Author: Jolly Clark

PayPal is a convenient payment option for businesses looking for a quick and automated payment processing system. 

However, it seems all is always fine until the business starts to expand. Once revenue doubles and sales are skyrocketing, then, unfortunately, PayPal locks users’ accounts on claims of “High-risk activity.” PayPal can tear your business down faster than it took you to build it.

In this article, we will cover the procedure to unfreeze your PayPal account.

What To Do If Your PayPal Account Gets Frozen

Why Did PayPal Freeze My Account?

Firstly, you need to understand that PayPal isn’t a processor but rather an aggregator.

What does aggregator mean?

Aggregators, unlike processors, are third-party PSPs (Payment Service Providers) that enable merchants to process payments without a merchant account. As such, PayPal doesn’t offer a merchant account nor the freedom that comes with it.

Instead, they enable you as a seller to conduct business under its umbrella or PayPal’s master merchant account. 

Considering this, PayPal limits what it can offer to sellers operating under its merchant account.  

The agreements between PayPal and the processors it collaborates with, limit the company from enabling high-risk entities to have an account under its wing. Because of the risk, Paypal tends to disable active accounts for various reasons such as when users:

• Violate PayPal’s terms of service.
• Experience a spike in transaction volume.
• Receive too many refund requests and chargebacks.
• Have low credit.
• Have an unverified account.
• Receive a customer dispute.
• Participate in fraudulent practices.

Various online industries are regularly involved with fraud and huge chargeback ratios, which defines them as high risk. Others experience sales fluctuations within a few days, then see no sales in the subsequent weeks.

There’s also the issue of having a large sum of money or logging into your account using multiple (unfamiliar) IP addresses. Whatever your case may be among these, you pose a risk to PayPal.

How Long Will My PayPal Account Stay Frozen?

Your account freeze can last as long as 180 days: However, if you don’t take action to reverse this, your funds will stay locked for six months.

How Do I Unfreeze My PayPal Account?

The only way for you to unfreeze your PayPal account is by waiting through the 180 days for your funds to be released. Nothing else. 

When PayPal freezes your account, it isn’t a human authority presiding over what and what not to freeze. PayPal’s automatic algorithm is responsible for flagging any account that sets off one of PayPal’s triggers.

When you notice that your PayPal account is frozen, you will be sent automatically to PayPal’s Resolution Center. Once on this page, restoring your account status will require:

• Proof of identity: Your state ID, driver’s license, social security number, passport, etc.
• Proof of business: Your Doing Business As documents, tax documents, licenses, bank account information, utility bills, contact numbers, etc.
• Proof of product: Your supplier’s identity and contact information.
• Proof of shipping: Proof that you shipped the flagged item.

Forward the listed documents they request and wait for their verdict. The Resolution department usually sends a receipt to show that they have received your submitted records. You should expect a notification about your account status in the following week. 

If your appeal gets turned down, PayPal will instruct you to wait out the 180 days to recover your funds. That will spell bad for many businesses and most likely call for the closure of your store. When this occurs, you can contact the PayPal customer support line to speak directly with a PayPal representative.

However, that usually results in little to no progress other than you providing further documentation to support your case. Just be nice to the customer rep (remember that it was an algorithm that flagged your account, and it’s not their fault) and see where your attempt takes you.

Bear in mind, though, not every business will recover its funds within the specified 180 days.

How Can I Get My Money Back From PayPal?

A possible alternative to your account freeze is to request your funds in monthly installments. All you have to do is request to receive a portion each month until your balance reads zero.

PayPal needs to hold your funds in the event of disputes and chargebacks. Without your funds, they would need to take on losses by covering these disputes in your favor. 

Summary

Unfortunately, the answer to “What to do If my PayPal account gets frozen?” is to wait out the 180 days. Maybe if you’re lucky, you’ll receive your funds in installments over the months.

However, setting up a merchant account will save you from such a business risk and is the only clear-cut option for your business to stay running without having your funds withheld or your account frozen.