A US seller had $1.3 million frozen by PayPal!

Following the incident in June where PayPal transferred tens of millions of dollars and 40 sellers came to the store to defend their rights, PayPal has been pushed to the hot search again. It is reported that a US technology startup directly posted on Twitter that its sales of 1.3 million were frozen by PayPal...

The seller posted on Twitter: $1.3 million was frozen by PayPal

Recently, the innovative multi-tool brand Flipper Zero posted a long post on Twitter. The main content of the post was that " the company's business account was disabled by PayPal, and the company's $1.3 million has been withheld for more than two months, but the reason was not explained ."

The post also included a cartoon of a fox stealing money. Currently, this post has sparked heated discussions among many netizens, has been reposted more than 2,000 times, and has received more than 6,000 likes.

It is reported that Flipper Zero is the first work of the American " Flipper Devices " team. It is a portable multi-functional gadget often used by hackers and hardware enthusiasts. It is mainly used to study penetration testing radio protocols, hardware , televisions , cars, garage doors and other systems. They are ready to use out of the box, and with the help of ready-made open source code libraries, users can customize and expand their functions.

Flipper Zero has raised more than $4.8 million in crowdfunding thanks to its popularity among hackers and hardware enthusiasts .

Since July this year , Flipper Zero has been selling products through its online store. But before July 7, the company was only fulfilling Kickstarter pre-orders , and non-backers could not buy the product due to stock shortages. But when it was opened to the public for sale, many people immediately rushed to buy it, which is enough to show its popularity.

Although the product sold well, Flipper Zero said it did not receive any money.

Before the product was launched, they decided to offer customers more payment options, including PayPal. As it turned out, although they offered consumers two payment methods, credit card or PayPal, two-thirds of their customer base chose to purchase Flipper Zero through PayPal.

One day after the sale started, $700,000 had been deposited into Flipper Devices' PayPal account. But on the same day, PayPal froze the funds, citing "an unusually large increase in your sales activity." I asked PayPal 's customer service, but he had no idea why the funds were frozen.

Initially, PayPal unblocked $26,400 of their account and said it would release the rest of the funds after providing a tracking number, but they were not overly concerned at the time. They immediately provided PayPal with the tracking number of the shipment, and that portion of the funds was eventually released as well.

But then, the unblocking of the remaining account funds was again put on hold due to another compliance requirement. It is reported that its team was asked to provide a large amount of information, including beneficiary information, ID proof, address proof, company bank statement, proof of purchase of goods, and proof of fulfillment of 10 random orders.

Under this circumstance, they thought about it and decided to stop providing the option of checkout through PayPal , but at this time, the cash in the account had surged to 1.3 million US dollars.

At the same time, the relevant proof they provided to PayPal was also rejected. Eight of the 10 random orders that PayPal wanted to audit had been successfully delivered, and two of them were put on hold due to courier problems. August 27 was set as the deadline for providing proof of delivery, so the team re-shipped the two devices through an expensive and priority delivery option. But when the deadline passed, PayPal still gave no news.

It was not until August 30 that the team discovered that its account was completely blocked and the funds would be frozen for 180 days. PayPal did not clearly explain why the funds were frozen, but only mentioned in the email: "Your account does not comply with our user agreement."

Two-thirds of the funds were frozen. Could it be an accidental injury?

The impact of frozen funds is undoubtedly huge. As a capital-intensive enterprise, in most cases, they need to purchase product components in advance and produce in advance, which requires a lot of working capital. Especially since the outbreak of the COVID-19 pandemic, there has been a shortage of chips, delivery times are much longer than usual, and prices are rising.

"With two-thirds of its funds frozen, the company is unable to push new orders as planned and pay part of its current liabilities. The freeze has caused significant losses to the company," its team said.

Although the account funds were frozen, it did not prevent Flipper Zero from being popular among overseas consumers. On major social media platforms, Flipper Zero has accumulated a lot of private traffic. First, on Twitter, it was launched in May this year, and has posted more than 600 posts so far, accumulating nearly 30,000 followers; its YouTube account has also accumulated 10,000 followers, and TikTok has accumulated 170,000 followers, and its videos have received 1.8 million likes.

As the company was unable to handle the funding issue, they chose to speak out on Twitter, hoping to find the contact person in the PayPal team who was responsible for the company's review. After the post was published, many people whose funds were frozen by PayPal left messages under the post, saying that they had tens of thousands of dollars frozen by PayPal.

In this regard, some netizens said: "There must be some illegal operation, otherwise PayPal would not freeze the account funds for no reason. It is best to check it yourself."

Earlier, PayPal froze merchant funds, and many domestic sellers were involved, with the amount involved reaching tens of millions. Many sellers even chose to hang banners downstairs of PayPal's Shanghai headquarters, demanding PayPal to give a reasonable explanation. At that time, PayPal's official response was: "The sellers whose funds were frozen violated its relevant policies and rules, and PayPal's decision to handle the matter was within the legal scope."

At that time, we found that some sellers were complained about for selling products that violated regulations. However, some sellers said that they were operating normally and in compliance with regulations, and that they were probably accidentally injured by PayPal.

Now, this brand has been frozen for another 1.3 million US dollars. The specific reason has not been explained yet, and the follow-up results can only be waited for. The truth of the matter remains to be verified.

In this regard, an industry insider said: "The reasons why cross-border sales platforms or payment platforms freeze accounts are very complicated. In many cases, sellers' accounts are frozen without their knowledge, and the platforms rarely provide solutions . " As the leader of the US payment industry, PayPal often adopts the policy of "suspending the account first and dealing with problems later" when problems arise. To some extent, this transfers the platform transaction risks to the sellers.

Sellers should be strict with themselves and stick to the bottom line of compliance. The occurrence of multiple PayPal incidents also indirectly proves that cross-border e-commerce is moving towards compliance, and even sellers with multiple platforms cannot take it lightly. Especially sellers with independent sites like the above sellers should avoid brutal tactics and move towards compliance and intensive cultivation.  

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