Paypal Fun and Games… and a Warning !


Feeling a little bit fed-up today because ‘those lovely people at’ Paypal, Permanently Limited my account yesterday and I spent most of the day in damage limitation mode, trying to sort out my account with them and trying to sort out alternatives for all the subscriptions I have with them.

And the reason they’ve limited my account may surprise a few people, it certainly did me, and is something a lot of people should be aware of and be worried about.

They appear to have taken a dislike to one of the programs I am an Affiliate of and have given their usual reason of:

We are hereby notifying you that, after a recent review of your account activity, it has been determined that you are in violation of PayPal’s Acceptable Use Policy regarding your sales of a pyramid program at Therefore, your account has been permanently limited.

Now I agree that the name does sound a little suspect but this program gives away a Free ebook which then offers you the opportunity to purchase products with resell rights and resell them through their website under your own Affiliate ID and earn 100% of the profits, there is NO PAYMENT to your upline at all except your initial ONCE ONLY payment to your supplier. So you are basically buying a product with resale rights and selling it.

That is the whole concept of commerce, You Buy Goods and You Sell Goods!

But Paypal do not seem to understand the concept of commerce or of the definition of a Pyramid scheme, which is:

A fraudulent moneymaking scheme in which people are recruited to make payments to others above them in a hierarchy while expecting to receive payments from people recruited below them. Eventually the number of new recruits fails to sustain the payment structure, and the scheme collapses with most people losing the money they paid in.


Typically, new recruits pay a sum of money to join the "program" and become a distributor of a product or service, and are told that they’ll make money based on the number of new recruits they in turn bring in. The basic idea is that the higher up on the pyramid you are, the more money you’ll make.

They seem to have missed the following points:

  • Payments (plural) are NOT made to the people above you, it’s a single once only payment to your Supplier .
  • No-one is recruited into the business or program, because there is no business or program to recruit them into, all you are doing is buying products and reselling products to new customers, and ONLY to your own new customers for 100% profit . Neither you nor your customers pay anything to someone else further up the ‘non-existent’ chain.
  • You pay ONCE to the person whose advert you responded to and then you advertise as an affiliate and earn 100% of every sale you make. That’s One Hundred Percent.
  • You do not pay anyone above you for any sale you make, so no-one above you makes any profit from your advertising and marketing efforts. Which begs the question, How can the higher up the pyramid you are, make you more money? You are not paying anything to anyone higher than your supplier, who you’ve already paid ONCE for your resaleable products and the same is true for all your customers. So where is the pyramid ?

I’ve been caught out myself with pyramid schemes in the past and know what to look for and avoid them like the plague but I think it’s more a case of Paypal not liking the name of the program, rather than them believing it to be a pyramid scheme. But of course they won’t admit they do not understand normal commerce practice, or that they do not understand the definition of a pyramid scheme, or that they have even made a mistake. They are God and what they say rules! No amount of appealing and explaining by me has shifted their position, all they say is ‘they will not change their position and the issue is closed in their opinion’ . I’ve worked both in retail and in customer service and Customer Service this is NOT!

But hey, we all know about the ‘dickensian’ way Paypal operate their business and always try to stay on the right side of their rules but they certainly do not make it easy, especially when they make up their own interpretations as they go along. But we live and learn.

What it basically means is that they have effectively shut down some of my websites and income streams until I can change them to use a different payment processor. This could take a while but there are many more payment processors out there I can use, many of which offer a much more professional service than Paypal do anyway and are covered by regulations governing the financial services industry, so you have a lot more protection from the sort of thing Paypal are trying to self-govern. I don’t really have that many sales going through Paypal anyway but it’s a real nuisance having to change my websites.

Which also makes me think, What ‘account activity’ are Paypal concerned about ? I’ve not actively started promoting StealthMoneyMaker yet and hence have not made any sales and therefore have no account activity, so how do they know about what I’m promoting if it’s only based on ‘account activity’ ? Sounds like they are checking up on all my online activities, which surely breaks some form of privacy laws, which sounds very suspect and unprofessional, coming from a company who are so obviously concerned about privacy themselves. Makes me very nervous about what else they might be doing!

But anyway I’ve calmed down a bit since yesterday, when I went through that terrible panicked feeling about what I was going to do. Today I’m still a little fed-up but have decided to get on with my business without Paypal. As far as I’m concerned it’s their loss not mine, as I simply will not use them as a payment processor in the future, if they ever reinstate my account.

My biggest loss will be in the commssions I earn from those places which only use Paypal as a payment option. But even that is compensated for in some respects, as it has made me look at all those subscriptions and cancel a lot of them because I just don’t use the websites anymore. So far I must have saved about $150 a month and I’ve still got about another $150 worth to sort out, many of which I’ll probably cancel when they become due anyway.

So Thanks Paypal , you’ve saved me around $200-$300 per month and you have ‘benefited’ by having lost all those credit card fees you would have charged me. I hope in time Paypal will reconsider and reinstate my account because using Paypal is the most convenient way to pay for goods online, but I certainly will not be using them as my payment processor again, it’s not worth the risk to my business.

Finally, the Warning I mentioned in the title of this post is to everyone who uses Paypal as their payment processor to sell products online. All you are doing is Buying and Selling goods , but unfortunately Paypal seems to believe that this normal commerce practice is a pyramid scheme. So check what you are doing very, very carefully and if you are at all in doubt, change your payment processor immediately.

Is your online business really worth the risk of ‘ungoverned’ or should I say ‘self-governed’ operations like Paypal, deciding they don’t like what you do and effectively shutting your business down ?

Mine certainly is not, so I’ll use a more reputable company to deal with, as my payment processor from now on!

Until the next time


Published by Graham

My name is Graham Lee and I am the owner of 'Thoughts On Internet Marketing', as well as other websites Marketing Information Products, Ebooks and Software for Internet Marketing and Affiliate Marketing. I've been involved in Internet Marketing for about 5 Years on a part-time basis, whilst holding down a full-time job. I now work more online but also have a number of offline businesses in Photography and Woodworking.

No Comments

Post a Comment


Social Media Auto Publish Powered By :