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Beware with Paypal if you're selling virtual goods

R

RSGM

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Apr 3, 2020
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#1
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The fact that Paypal doesn't condone virtual goods trading has been set in stone in their TOS since 2007-2008.
However they haven't been seemingly caring about it and have kept a "looking through the hand" kind of mentality.
We sell virtual ingame currencies for certain games and have been doing so since 2016.
Now a month ago, Paypal decided to close our Paypal account because we acted in violation of their terms of use.

Our revenue was around €150.000 eur per month, so we were raking in decent profit for Paypal which came from acceptance fees.

Ontop of refusing to do business with you / your company, Paypal also freezes your funds for 180 days incase of chargebacks that might arise in the future.
Our company account has around €42.000 locked in it at current time.
After those 180 days they have been known to remove some of the funds that were left in the account for "Damages caused to Paypal".
Sometimes this is a portion of the money or sometimes even the full balance.

My story isn't the only one, this isn't a stand alone case. Alot of the websites operating the same business model have gotten their Paypal locked in 2020 and a lot of my friends who are drop shippers (even though they don't deliver virtual) have faced the same issue.

This goes as a warning to everyone who tries to make a buck on the internet whilst using Paypal.

- S
 
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#4
RSGM said:
Think it's less a thing than years ago but it still happens although we don't do it ourselves.
Click to expand...

You are correct PayPal banned all virtual goods. csgo skins etc basically everything thats resold and not through actual game dev will get you banned when paypal checks it out. I finally figured it out too and its because Mastercard BRAM rules. Had to talk to banks, acquirers, paypal, merchants to map it all out as Mastercard and game companies don't want to let the cat out of the bag before they ban hammer everyone and lock funds. Read this particularly at the end: Money Launderers Exploit Online Gaming Loopholes Unfortunately some bad actors in the industry ruined it for everyone and turned the tide on it. Before most banks turned blind eye and didn't think much of it but I think some of the big developers realized they could use legal powers to make the industry a pain to deal with.

At this point I would be looking at different business models as there is not a long term option with fighting Mastercard.

As for the 180 days and damages luckily we got our money without any penalties.
 
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#5
mmoga said:
You are correct PayPal banned all virtual goods. csgo skins etc basically everything thats resold and not through actual game dev will get you banned when paypal checks it out. I finally figured it out too and its because Mastercard BRAM rules. Had to talk to banks, acquirers, paypal, merchants to map it all out as Mastercard and game companies don't want to let the cat out of the bag before they ban hammer everyone and lock funds. Read this particularly at the end: Money Launderers Exploit Online Gaming Loopholes Unfortunately some bad actors in the industry ruined it for everyone and turned the tide on it. Before most banks turned blind eye and didn't think much of it but I think some of the big developers realized they could use legal powers to make the industry a pain to deal with.

At this point I would be looking at different business models as there is not a long term option with fighting Mastercard.

As for the 180 days and damages luckily we got our money without any penalties.
Click to expand...
When did you get your money unlocked? How many months ago? If u don't mind me asking, ofcourse.
 
#7
mmoga said:
180 days exact :) we had paypal rep assigned to our account prior so our relationship was good
Click to expand...
I think I formed my question badly. When did Paypal lock your account? How many months ago did this happen?
After the lock it took 180 days to get your funds released, but just interested when ur paypal got locked.
 
#9
PayPal has been running that game for years, if not always. We have always made sure to clear the account every day so there is never much money left in them. It must be a way to avoid loss.
 
#12
mmoga said:
You are correct PayPal banned all virtual goods. csgo skins etc basically everything thats resold and not through actual game dev will get you banned when paypal checks it out. I finally figured it out too and its because Mastercard BRAM rules. Had to talk to banks, acquirers, paypal, merchants to map it all out as Mastercard and game companies don't want to let the cat out of the bag before they ban hammer everyone and lock funds. Read this particularly at the end: Money Launderers Exploit Online Gaming Loopholes Unfortunately some bad actors in the industry ruined it for everyone and turned the tide on it. Before most banks turned blind eye and didn't think much of it but I think some of the big developers realized they could use legal powers to make the industry a pain to deal with.

At this point I would be looking at different business models as there is not a long term option with fighting Mastercard.

As for the 180 days and damages luckily we got our money without any penalties.
Click to expand...
If this is true how do big websites such as PlayerAuctions still allow payment processing? The whole website is based around selling ingame virtual goods
 
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