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Additional PayPal verification requirements

By Chris Dawson August 25, 2010 - 11:28 pm

If you’re running a business and use PayPal it’s likely that they’ll be contacting you to request further business and personal information. This could include amongst others: photo id; proof of address (e.g. bank statements, utility bills); proof of your company status and directors; audited accounts.

Until you provide the updated information (you have six months to do so) your PayPal account will be restricted. In reality that means you can do everything except close your account.

PayPal say that they are requesting the information to comply with laws for the prevention of money laundering. The laws require them to confirm the identity and authorisation of persons who have access to your account.

Just to make life difficult they can’t accept documents by email, but you can either fax them or upload them through the resolution center in your PayPal account.

The email details the documentation that they need (in my case: Passport; City of Residence; Legal entity Status) along with a fax number to send the documents to. Sadly the email resembles a phishing attempt and ended up in my spam filters. However you will get confirmation that the email is genuine, next time you log into your PayPal account.

It’s time PayPal stopped requesting important information by email and if they feel that they have to email users then it should simply read “Please log into your PayPal account to see an important message”. Sadly logging into my account doesn’t specify the documentation required and the only place it’s fully detailed is in the email.

One final piece of fun – PayPal have requested a copy of either my “Passport, Driving Licence or National Identity Card” but also state that they must be dated within the last six months! Sorry PayPal but my passport is four years old and they only issue me a new one once every 10 years!

  • Cassie
    7 years ago

    Whilst in theory I think this is a good idea, I don’t feel very safe sending this sort of information to Paypal!

  • 7 years ago

    I also don’t feel safe sending this kind of info to PayPal, especially considering their known ability to lose stuff that is sent to them. As I no longer need my account for work, if it happens, my account can stay restricted.

    On that note, does anyone know how to tell PayPal this is no longer a business account?

    • JP
      7 years ago

      You should be able to downgrade it to a premium personal account

  • 7 years ago

    I’m in the US so probably don’t have to worry about this. But if we’ve already gone through an account freeze in the past and performed those listed steps (and some extras) is PayPal going to make us do it again?

  • Jimbo
    7 years ago

    Seems like PayPal are always determined to make things complicated and almost unworkable.

    If PayPal didn’t have a near monopoly on eBay Payments….

  • Jon Lee
    7 years ago

    I had terrible trouble with PP about a year ago when they demanded information exactly like this from me. Why did I have trouble? I have no idea. There has never been any kind of problem with my accounts, not with any transaction, ever. But my guess is that it’s because I’m overseas. Normally I live in Australia but because of my work I’ve been in various Asian countries for 3 years. And while I can understand that trying to use my account from overseas might initially look suspicious (especially to a mindless bit of software), I just cannot believe that this is a rare or unusual need. More so nowadays than ever before. Anyway, despite my irritation and resentment, I dutifully went through their verification process again and again and again. It included changing passwords, verifying account information, mailing them copies of paper documents, talking to them by phone, and more. Each time I thought I’d finished, they wanted something else, or I had to repeat something I’d already done. It took weeks before I’d gone as far as I could with it (and as far as I could tolerate). The end result, after all that time and hassle, was that they decided I couldn’t use my accounts anyway! Why? Because “statistically” the transaction I wanted to make was “risky”. ie. My actual, real, meaningful, perfectly legitimate account history counted for nothing. The copious proof I’d provided that I was who I was supposed to be and that I really did want to make that transaction counted for nothing. And the fact that I wanted to transfer my own money from one of my own accounts to another of my own accounts also counted for nothing. (I can’t see how any of this is risky for them or for me.) So they apparently give the dumb output of some generic statistical risk software priority over real, relevant information. Of course that’s totally ******* stupid. It’s similar to saying that because someone in the city you’re visiting robbed an ATM, you are no longer allowed to withdraw funds from your own account. In the end, I had to give up and find other ways to transfer money from myself to myself. Not that I want to use PP, I hate them, for many reasons going back a long, long time. But it’s like using eBay. Unfortunately some of the time they’re the least-bad of a bad set of alternatives. However since this debacle I haven’t even tried to use PP. It’s just not worth the hassle and irritation and wasted time, especially when you just never know if there’s going to be a reasonable (as opposed to twisted and nonsensical) outcome. But I’m longing for the day when there is a good alternative. Actually the market’s big enough, I’m surprised it’s not crawling with competitors already. (If anyone has any suggestions, please tell me!)

    • Lucinda
      7 years ago

      I sympathize greatly with Jon Lee.

      I used PayPal for many years to buy things, but never kept any money on it. I decided to sell a few old items on eBay and made about 280USD paid to my PayPal. Suddenly Pay Pal limited my account, claiming there was third party trying to access it. They requested a bunch of documents from me and when I kept providing them with new documents and called their customer service they just kept on asking for more.

      It came to a point where it was impossible for me to provide these documents, because it wasn’t possible for my banks to issue such (they didn’t even know what I was asking for when I called and they said they never issue those kind of documents)

      I provided one document that was accepted by PayPal but I couldn’t provide more and I said I wouldn’t. On the basis of that one document they could easily confirm my name and address and even more. However, that was not good enough. They permanently locked my account and they said they will keep my money for 180 days.

      During the case the times I called support I was told and ‘promised’ multiple times that the case is going to be solved and my limit lifted. But after a few times I realized they just have their generic replies just to get rid of you.

      I wonder how much interest they will get for holding my 280USD for 6 months, if you consider all other sellers who faced this they must make a lot money. It’s easy to steal and invest someone else’s money, not so easy to make that money yourself and keep it away from vultures like PayPal.

      I hope there will soon be good alternatives to PayPal, for now I’m moving on to Google Checkout, certainly not a PayPal customer anymore.

  • Andy
    7 years ago

    This is absolute nonsense until you realise that all they really want is more and more personal information about you. I would guess that 99% of business accounts are tied up with legitimate bank accounts so why can’t paypal just ask your local account manager to verify you?

    If there is a problem after this it can be sorted with minimal fuss not hours of frustrating extortionately priced calls too paypal call centres.

  • TomH
    7 years ago

    In the US there are new tax data reporting requirements to the IRS (Internal Revenue Service)looming and the specifics are anything but clear and the overall impact is cloudy at best.

    There could be very major impact on US PayPal users and knowing how PayPal tries to do one-size-fits-for-all, I would not be surprised at spillage over the entire PayPal country networks.

  • 7 years ago

    My driving licence doesn’t have a photo, I have no need for a passport and as far as I know plans for national ID cards in the UK have been scrapped. Where would that leave me if this information is required?

  • BigPoppa
    7 years ago

    We have been asked for this info again this year (2 weeks ago). Haven’t got round to faxing it all over yet, one of those things that whilst easy to do, finding the time and motivation to is a pain.

    • umass
      7 years ago

      so this isn’t a new procedure then if it has been asked before as bigpoppa has mentioned?

    • JP
      7 years ago

      I have not seen a fax machine for years 😉

  • ebayadvisor
    7 years ago

    preview.tinyurl.com/2g43w49

    The first time, they wanted me to fax them a copy of my ID, a copy of my Social Security card and a ‘qualified’ piece of mail.

    Paypal’s email to me:

    “We are contacting you regarding the limitation on your account. To restore full access to your account, we require the following information:

    * Please provide a copy of a government-issued photograph identification (i.e. passport, driver’s license) that provides date of birth for the user registered on this PayPal account.

    * Please provide a copy of a utility bill verifying the address registered on this PayPal account.

    * Please provide a copy of your Social Security card that displays your full Social Security Number (SSN). We will also accept a copy of your W2 form, 1099 form or paystub that displays your full Social Security Number (SSN).

    You can upload scanned documentation or print a fax cover page in the Resolution Center. The Resolution Center can be accessed by logging into your PayPal account. You may reference the fax number on your fax cover page or fax to: 303-395-2802

    preview.tinyurl.com/2g43w49

    I faxed them all of this, along with not one, but two pieces of mail with my current address on it: a doctor’s bill and my student transcripts.

    Then, they said that they never received the fax in their encrypted fax system that according to them is state-of-the-art; my vital information (a copy of my real state issued ID card and a copy of my real Social Security card) was lost in cyber

    preview.tinyurl.com/2g43w49

  • Terry
    7 years ago

    I am one that is glad this is happening, maybe at last Paypal are going to made to keep to the letter of UK law, its about time too.

    I used to work for a very well known high street bank before setting my own business and know the FSA regs very well, and see from time to time paypal breaking them, one being the money laundering regs, this has been law for some time now, so how paypal have got round it I dont know.

    When you open any type of bank account this has to be gone through, when you first sign up with an accountant for your business you have to do it then too.

    Its about time the FSA come down hard on paypal.

    Time to put a stop to all this silly reviews on tranasctions a week after the sale has gone through and the goods have been sent out, Paypal have a care of duty to both the card holder and the retailer, any checks should be done at the moment the card is presented, if there is any doubt, the transaction should be declined, the same as at any high street store at the till.

    High street stores use a code 10 authoristion if there is any doubt and you have to provide some security info to the merchent bank before the transaction is allowed to be authorised, but this is done at point of sale, not a week later, paypal seem to get round this, god knows how with the duty of care, but they do.

    Its about time paypal starting acting responcebly.

    Soz 4 the spelling – late at nite – lol

    • TomH
      7 years ago

      Totally agree, whether the UK or the US. Of course PayPal exclaims, when it is useful in their view for them, that they are not a bank or bank like entity, they are just a service transmitting funds from one to the other! Give me a break.

    • radams
      7 years ago

      In the paranoid eBay/Paypal world making too much money or money too quickly is considers suspicious.

      They worry about a business running off with the cash and leaving them to foot the bill.

      Their way round this is to freeze their account and ask them to prove ID, stock and delivery.

      They do this under the guise of KYC (nothing to do with fried chicken, its Know Your Customer). Most KYC check are done on line, eg. Is there a record of Mr X living at this address, this is similar, but not quite the same as a full credit credit check (you agreed to it in your seller participation agreement, check the small print).

      Paypal do a similar check on all new UK accounts and have done for a year or two, under the KYC rules they have an obligation to check any existing customers in this way too, of course there is a certain a amount of leeway and most banks can say ‘we’ve known this guy for x years, we know he’s ok (an ongoing and existing relationship is exempt)’, but if you look like a risk paypal will cover their backs and ask you for the extra ID.

      If this check fails then they will ask you for further ID, nothing special, just a copy of your ID and a utility bill, probably with some proof that you really had the item you sold (eg. a invoice).

      The worst possible thing you can do is argue the toss, just give them what they want in a timely matter, I know it goes against the grain but its better than having your account killed or suspended.

      Any seller from the UK should have their personal, and business ID, plus accounts and invoices available, because these KYC checks can come from eBay/Paypal, your bank, HMRC, any online merchant account provider etc. It’s far easier to give them what they want than have them freeze your money for days/weeks/months/years.

    • radams
      7 years ago

      Sorry TomH but paypal are a bank, not just a bank like entity, but a real, licensed, EU run Bank.

    • TomH
      7 years ago

      “Sorry TomH but paypal are a bank,”
      Yes in the EU it is. Totally forgot that when I posted yesterday. 😉

  • 7 years ago

    I have a big problem on photo ID, my passport is out of date now about 2 weeks ago and I don’t have a driving licence for medical reasons and I don’t have an ID card either.

    Hubby has a paper driving licence too.

    I don’t exist then, even after being on eBay/paypal for 8 years :-s

  • Gerry007
    7 years ago

    GUILTY to proved INOCCENT….me thinks.!!!

  • Kevin Morris
    7 years ago

    I think its about time Ebay users around the world stood up for themselves.
    If i get such an Email from Paypal OR Ebay for that matter, i’m going to close all my accounts with them, and then send them an email reply which will go something like this:
    “Go f**k yourselves, you miserable, soulless, information spongeing, initiative destroying c**ts”.

    I think that if Paypal recieved a few thousand emails like from around the world, they might start changing their policies.

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