Ebay and PayPal: Consumer Friend or Foe?

eBay and PayPal have become household names since they began in 1995 and 1998, respectfully. eBay is an online Auction website that allows just about anything to be sold to buyers all over the world. eBay began using PayPal as an ecommerce provider and as PayPal rose in sales and transactions, eBay bought them out solely in 2002. With billions of dollars flowing through both high profile companies, it seemed a perfect fit.

eBay has been touted as an American company catering to the American way of life, where you can list items to sell for the price that you deem fit, and you can buy quality items for a bargain. If you are a new seller, eBay gives the feeling of empowerment to sell what you want, when you want, and for how much you want. It says that your collectibles or housewares, etc. have value and someone wants your “stuff”. If you have an item that is popular, you might even have a “bidding war” on your hands, which is, oh so exciting!

Although it is not considered a bank, PayPal is licensed as a money transmitter on a state-by-state basis. With PayPal’s connection to eBay, it is the suggested and sometimes only way to pay for items bought on eBay. PayPal is recognized as a safe and secure way to pay for items across the world. As far as ecommerce goes, PayPal has the monopoly with eBay, for online Auctions and selling. On a positive note, you can use PayPal to pay for items or send a donation, request money, etc. for most things outside of eBay, making PayPal most appealing for all ecommerce needs.

All in all, the knowledge that eBay owns PayPal, may or may not have been news to you, and on any ordinary day, it might not lend itself to any significant importance. However, some interesting policies and practices have come to light recently.

Did You Know?

PayPal can put a HOLD on your account for all eBay related monies? They will allow you to take funds out for shipping, but your money can be held for 21 days, and longer if they choose. If you do not comply with all the regulations, you will not be able to access the money you’ve earned on eBay.

PayPal has a sales/feedback quota. According to eBay’s policies, they require you to sell enough items in a particular time period and procure positive feedback from those sales. Upon speaking to a customer service representative at PayPal, any eBay seller must maintain a Detailed Seller Rating (DSR) or positive Feedback rating of 25 within a 12 month period.

A seller must avoid having a high rate of customer refunds, disputes, claims, or charge backs. eBay also expects a seller to be consistent in their selling activity. There are more restrictions to these policies and you can find them at PayPal’s website under their Payment Holds Policy.

Why Are These Policies Problematic?

Since “feedback” from customers is not mandatory, it should not be factored in as a reliable measure of being a good seller. People cannot be made to leave Feedback. So, even if you sell 25 items, if your customers choose not to leave feedback, it is not a qualified sale toward your quota.

Sometimes, a buyer will purchase your item, and then fail to pay.  Typically, a seller will open a dispute to try somehow to receive their payment. Even if this is not the seller’s fault, it can be held against you if you have too many of these. A seller can have 100% positive feedback, but still be penalized for not having enough ratings numbers!

eBay also wants to make sure that if you utilize their services, that you are consistent in listing items to sell, which is saying they expect you to sell something all the time.

The results of not meeting eBay’s quota can be devastating!

As an eBay and PayPal user and seller, this has recently happened to me and irked me to my core! I had thought that this had finally been resolved, but it has not, and even though they released some of the hold after buyers had received their items, they are still holding any new monies for items sold until I reach the DSR ratings. I feel very disillusioned by this knowledge, and am not happy with either of these companies. To me, it has taken the joy out of wanting to sell on eBay! I bought into the thinking that “as an American, I can buy and sell when I want, what I want, and how much I want”! So not true! I felt that I needed to share so that other users and potential users can be cautious.

The bottom line is this: Be sure to read the “fine print” before buying or selling on eBay!

Have you had a negative experience like this with eBay or PayPal? Were you able to resolve the issue and how? What advice would you give to others in this situation?

Please share your story, we would love to hear!


  1. Jim Pickens says

    Keri, this is a well written article. It informs, cautions, expresses your dismay, and, yet, does not “rip” the companies apart. It’s good advice for all sellers.

    • Thank You! I appreciate it. I would really like to see some policy changes that are for the consumer here. 🙂