This is the final response I got from paypal after a few months of trying to close my paypal account. I was trying to close it because I was unable to pay for something online because the business I was working with uses paypal and my paypal account was set to "limited". I got tired of trying to remove my "limited" status so I tried to close the account.

All of this mess started way back in August. They finally closed the account. Keep in mind that I had zero money in the account and I didn't owe any money.

Anyway, here is their final response unedited.

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Dear Brian Dean,

Re: BBB Complaint 276661

I sincerely apologize for the difficulties you have encountered while using PayPal. The company values your business, and I want to do everything possible to resolve your complaint. I have reviewed your PayPal account and your recent inquiry to the Better Business Bureau. Please allow me to offer further explanation concerning your issue.

As you are aware, on 08/06/07, you account was placed under limited access, when, our system detected unusual charges to a credit card linked to your PayPal account.

In accordance with our User Agreement, if you engage in any Restricted Activities, we may take various actions to protect PayPal, eBay, a User, a third party, or you from Reversals, Chargebacks, Claims, fees, fines, penalties and any other liability. The actions we may take include but are not limited to the following:

a. We may close, suspend, or limit your access to your Account or the Services (such as limiting access to any of your Funding Sources, and your ability to send money, make withdrawals, or remove financial Information);
b. We may contact buyers who have purchased goods or services from you, contact your bank or credit card issuer, and warn other Users, law enforcement, or impacted third parties of your actions;
c. We may update inaccurate Information you provided us;
d. We may refuse to provide our Services to you in the future;
e. We may hold your funds for up to 180 Days if reasonably needed to protect against the risk of liability; and
f. We may take legal action against you.

PayPal, in its sole discretion, reserves the right to terminate this Agreement, access to its website, or access to the Service for any reason and at any time upon notice to you and payment to you of any unrestricted funds held in custody for you.

At the time the account was limited, we asked you enter your Expanded Use Number and confirm your location. Please understand that our request for these documents was not intended to insinuate any wrongdoing on your part, nor was it meant to be an invasion of your privacy. Because PayPal is an Internet Company, we do not have the pleasure of dealing with our customers face to face; therefore, we have to be certain of whom we are conducting business with. While I am certain this situation must have been frustrating for you, account access is limited at times to protect all of our members, including yourself. We have a responsibility to all of our members to maintain a safe and secure online payment service. To achieve this goal, we must be able to verify or authenticate all information associated with your PayPal account.

Our records show that the requested steps have been completed and access to your account has been closed. Also, you stated, "Paypal MUST close my account. This is NOT NEGOTIABLE and they must do it IMMEDIATELY."

Per your request, your account has been closed.

If you have any further questions, comments, or concerns, please feel free to contact me directly at crme@paypal.com.

Sincerely,
Demesha
Executive Escalations

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I've been using them for years without problems.
Either instant tranfer or debit withdrawal from your bank account otherwise you must have money in paypal account.

Well, as soon as something happens that THEY think is suspicious they can hold your account. If your account has money in it, that means that you have no access to that money. It could take months to resolve the issue.

In my case, I had zero money in the account and I didn't owe any money. So I don't see a problem with closing the account. If I had a bank account with zero money in it, but no negative balance, and I asked the bank to close the account, they would probably do it pretty much immediately. In the case of paypal, it took them 2 months between the time I initially asked them to close it, to when they finally closed it.

I have a feeling that if I hadn't complained to the Better Business Bureau, my account would still exist and be "limited".

I've run across more stories like this on the Internet about PayPal. Personally I've never had trouble with them, but I don't trust them any more, only using it when there's no alternative. I keep zero funds in my account.

They seem to have some sort of automated fraud detection system that's hypersensitive. This is starting to give them a bad reputation, but they don't seem to care. Maybe they know the franchise isn't viable and they're trying to maximize returns before closing up shop.