Not upheld: account suspension, fund retention, and offset against losses complaint against PayPal UK Ltd

Decision detail

Summary

C, a limited company represented by Mr H, complained that PayPal permanently limited its account and retained funds, later offsetting them against losses on another account. PayPal refused to disclose the reasons for limitation but claimed it had made a reasonable decision. The ombudsman found that Mr H had breached PayPal's terms by accessing C's account via VPN and from Pakistan, a non-permitted country, which justified the permanent limitation. The ombudsman also found PayPal had proven links between C's account and other accounts where losses occurred, making the fund offset fair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman accepted PayPal's confidential security information under DISP rules, finding it appropriate to withhold details to protect PayPal's legal and regulatory checks. Even without the confidential information, the use of VPN/hosting services and access from a non-permitted country (Pakistan) constituted clear breaches of PayPal's terms, justifying permanent account limitation. The ombudsman found PayPal had proven links between C's account and other accounts where losses occurred, making it fair to offset C's funds against those losses.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website