I Challenged Paypal on their Warning Email; Here’s Their Response…

[UPDATE #4 1/2/2015: One DoC reader reports getting the original email from Paypal with the warning against withdrawing, and more recently getting an updated email from Paypal, saying (emphasis added): ” We’re not sure you’re aware but it appears the MyCash has been used for deposits to your PayPal account, and then those deposits have been withdrawn or used to make purchases that do not appear to be for retail purposes to online or in store retailers. The MyCash feature is for making deposits to your PayPal account for retail purchases.” They’re clearly getting upset about buying money orders and Serve loads. I’ll probably keep doing these things in small numbers, and hope that I don’t get shut down.]

[UPDATE #3 12/16/2014: Here’s an interesting post from travelwithgrant.com indicating that the main problem is paying off your Paypal credit with Paypal Cash cards. Walmart and Serve purchases are not a problem. Who knows?

See also this post from FrequentMiler about how to cash out Paypal Cash cards in the event your account is frozen.]

[UPDATE #2 12/11/2014: I now see one Flyertalk member claim that Paypal updated the wording of the infamous email to include: “to purchase pre-paid cards and exited through large even dollar debit card purchases at Wal-Mart we may have to limit or close your PayPal account”. Sounds like they plan on clamping down even on those who don’t withdraw. However, I only know of one person who was shutdown so far. Developing…]

[UPDATE 12/10/2014: I have now seen a report of a shutdown from someone who didn’t withdraw. I’m treading lightly for now.]

Paypal Cash

Paypal Cash card is a reload card you can buy at various retailers and load the funds into your Paypal account to make purchases with. Some folks have success buying these cards with a credit card and earning points. Technically, you can then withdraw the money to your bank account, making this a rival for the now-defunct Vanilla Reload cards.

The reason why it’s not a rival is because Paypal aggressively shuts down people who “abuse” the Paypal Cash cards. Therefore, those of us who go the Paypal route are careful to unload the funds by making purchases or buying money orders using the Paypal debit card, and not by withdrawing to a bank directly. This makes it more of a hassle than the legendary Vanilla Reloads.

The Warning

A few weeks ago,  many people in the miles-and-points community (link, link….) reported getting a warning email from Paypal over their usage of Paypal Cash cards. The email stated that Paypal Cash cards are not meant to be loaded and withdrawn, and that if you keep up your activity, your Paypal account may be shut down. Oddly, even people who never withdrew the money to their banks reported getting the email.

I didn’t get the email at the time. My guess, at that point, was that they only sent it to people who maxed out their $4,000 monthly limits, but not to someone like me who uses it more moderately.

Well, just yesterday, I merited receiving the infamous email. Here it is:

paypal warning2

 

Challenging Paypal

Now, I never withdraw the funds from the Paypal Cash cards. I either use them for regular purchases (okay, maybe not so regular) via the Paypal debit card, or I use them to pay off my line of credit that I have with Paypal, which can be paid with funds from the connected Paypal account.

With righteous indignation, I emailed Paypal claiming complete innocence. Paypal replied that that email was simply a general email sent to all people who used Paypal Cash cards.

Here’s the Paypal reply:

paypal warning

 

I don’t think it’s quite true that everyone who used Cash cards got the email, but probably everyone who did a certain volume got it.

I like the fact that they write clearly that as long as I don’t withdraw the funds, I won’t be shut down: “I guarantee you that your account will remain in good status as long as you will not withdraw the money”. They don’t leave any room for other “abusive” behaviors.

Sure, any company can flag huge amounts of money running through an account, but if we keep it reasonable and we don’t withdraw then we should be okay.

My Thoughts

When I got the warning email, I was debating whether to contact Paypal about it. The main reason I decided to ultimately contact them is because they clearly mention “shut down” in the warning email. It would be hard to fight with them and claim that I hadn’t been warned. I really didn’t think they’d be able to start pointing fingers at my debit card usage which I felt was within the realm of reasonable, so I figured it couldn’t hurt to send them an email to verify that I’m in the clear.

Now I feel that since they clearly told me that the warning is only about withdrawing money, it doesn’t apply to me. If they decide to start flagging certain “abusive” purchases, that will be a new campaign and they can’t  claim that I’m forewarned.

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23 Comments
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Paul
Paul (@guest_267967)
June 15, 2016 18:15

Got this today:

We like to keep the entire PayPal network safe and secure, and that includes your PayPal account.

To do this, we regularly check the activity that occurs throughout the network. Based on a recent review of activity, it appears your PayPal account has been used (directly or by assisting another customer) for deposits from My Cash cards, but the funds have been withdrawn/transferred out of the PayPal system via Personal Payment, Friends and Family payment, to a bank, online bank, ATM or prepaid card. We’re not sure you’re aware, but the My Cash feature is intended to allow PayPal customers to make deposits and then use those funds for online retail purchases.

PayPal values your business, but, if we continue to see activity where My Cash cards (or similar products) are used to add funds to your PayPal account and those funds are subsequently withdrawn/transferred out of the system, we may have to limit or close your PayPal account. If you think we’ve made an error, here’s how to contact us:

Log in to your PayPal account.
Click Contact Us at the bottom of the page.
Click Send us under “Email Us.”
Follow the instructions to complete the steps.
Once again, we value your business and we also appreciate your attention to this matter.

Sincerely,

Jordan

Customer Solutions Agent

Gerald
Gerald (@guest_259851)
May 17, 2016 21:59

My account got shut down today because I loaded a MyCash Card and sent some of it to a friend as a cell phone payment to his paypal.

Alex
Alex (@guest_78646)
February 19, 2015 09:15

Hey,
I know this is a little old… but question

What if I loaded a PPMC to my account and did a few cash back transactions at walmart?

AnonymousUser
AnonymousUser (@guest_56677)
January 1, 2015 23:49

PayPal revised the wording of their email again. On 11/5/2014 I got the email about making withdrawals. However, on 12/9/2014 I got the following email (emphasis mine):

We like to keep things safe and secure, including your PayPal account. To do this, we regularly check the activity on our customers’ accounts.
We’re not sure you’re aware but it appears the MyCash has been used for deposits to your PayPal account, and then those deposits have been withdrawn or used to make purchases that do not appear to be for retail purposes to online or in store retailers.
The MyCash feature is for making deposits to your PayPal account for retail purchases.
If we continue to see this activity of using the MyCash with your PayPal account for transfers, we may have to limit or close your PayPal account.

Sounds like they were trying to exclude Serve.

Idonthavenoname
Idonthavenoname (@guest_48923)
December 7, 2014 18:48

I got the email today…Needless to say, i’m very disappointed lol..NOT.

Credit Card Joint
Credit Card Joint (@guest_42522)
November 26, 2014 01:16

Paypal is know to close accounts without reason. Most MS stay away from PP for this reason.

Billy
Billy (@guest_42449)
November 25, 2014 22:35

How did you contact them? I followed the instructions but got an automated email response. I responded to the auto email, and they gave me a phone number to call MyCash and talk to them about it.

Newbie
Newbie (@guest_41777)
November 24, 2014 22:28

Is buying money orders with PPBDC abusive? Or is that not a withdrawal?

Parkerthon
Parkerthon (@guest_41661)
November 24, 2014 18:16

Is using PP business debit card with Serve or Square Cash abusive?

Curtis
Curtis (@guest_41502)
November 24, 2014 12:43

I have not gotten the email yet and I usually do at least $2-3k/mo, sometimes $4k. I also never withdraw.