In USA, PayPal is licensed as a money transmitter on a state-by-state basis. PayPal is not classified as a bank in the United States, though the company is subject to some of the rules and regulations.
In Europe, PayPal is registered as a bank in Luxembourg under the legal name PayPal (Europe), a company regulated centrally by the Luxembourg bank authority.
According to the San Francisco Chronicle, there are approx. 100,000 complaints outstanding at PayPal (Are any of these yours?). In many instances disputes can run on for months leaving people frustrated and out of pocket as they are unable to access their accounts. So what happens to the millions of dollars tied up in frozen accounts and disputes? Well, here is a clip from the San Francisco Chronicle that basically sums it up:
U.S. District Judge Jeremy Fogel of San Jose refused to dismiss a lawsuit that seeks class-action status on behalf of thousands of PayPal customers nationwide. A common allegation is that the company brushes off or stalls customer grievances for months and meanwhile freezes the customer's account and pockets the interest (So that's how they make their money!). No wonder they freeze so many accounts! |