PayPal account limitations: what are they and how to avoid them

Account limitations can impact your ability to process payments, pay vendors, and access money for other business needs. Learn more about what they are, so you can help protect your business.

What are PayPal account limitations?

PayPal account limitations are temporary restrictions that prevent you from sending, receiving, or withdrawing money from your PayPal account. Limitations can be placed on your account if there is suspicion of fraud, if your account is non-compliant with PayPal's Acceptable Use Policy and User Agreement, or if your dispute rate is too high.

How to check if you have account limitations in place?

If your account has been limited, you'll get an email from PayPal explaining the reason for the limitation. Log in to your account and go to the Resolution Centre or click the bell icon at the top of your Dashboard for more information. This will tell you what to do to remove the limitation, if applicable.

Why do PayPal account limitations happen?

There can be several reasons for an account limitation:

Unusual account activity

If PayPal believes someone is using your account without your knowledge, the account could be limited to protect you from fraudulent activities while PayPal investigates the suspicious transactions.

Similar steps may be taken if your debit or credit card issuer or bank notifies PayPal that someone has used your card or bank account without permission.

Non-compliance with regulatory requirements

Limitations can also be placed on an account that has been found to be out of compliance with regulatory requirements. PayPal may limit your account while you gather any required documents or while working with you to satisfy any other regulatory requirements.

The same is true if you don't follow PayPal's Acceptable Use Policy — selling banned items, such as prescription drugs or guns, for example.

Excessive claims and chargebacks

When there are many buyer claims and chargebacks your account may be reviewed. During this review process, you may experience an account limitation. Issues that can be reviewed include:

  • Merchant error: Practices and policies on your part that lead to disputes
  • True fraud: Unauthorised fraud that you failed to detect and reject
  • Friendly fraud: Customers that dispute a legitimate charge

Sudden product of sale changes

If you start to sell an entirely new type of product, specifically higher-end items like jewellery, your account may be limited while PayPal investigates the change. Additionally, a rapid increase in sales volume may trigger account limitations to ensure there is no risk of error or fraud.

When does PayPal remove account limitations?

The time it takes to have account limitations lifted varies depending on the issue. The fastest way to keep the process moving is to submit the requested information as quickly as you can. Once you have, PayPal will aim to get back to you within 3 days to let you know what to do next.

Here are the steps to take to remove the limitations:

  1. Go to the Resolution Centre and log in.
  2. Review the requested documents and verify your account if needed.
  3. Provide all documented proof resolve the issue. Learn more about submitting documentation.
  4. If for any reason you can't complete the necessary steps to remove the limitations, contact Customer Service for help.

How to help avoid account limitations

Account limitations can impact your ability to conduct business, so you should do everything possible to stay compliant. Here are five ways to help avoid the most common reasons for limitations.

Meet Seller Protection requirements

By following PayPal's Seller Protection requirements, your eligible transaction may be protected against claims and chargebacks. Seller Protection requirements include shipping to the address on the Transaction Details page, capturing proof of shipment and delivery, and ensuring an item is eligible for Seller Protection before you send it. (Limitations apply).

Avoid suspicious transactions

Don't sell items listed as prohibited in PayPal's Acceptable Use Policy, such as drugs, illegal items, firearms, or obscene materials. In addition, PayPal requires pre-approval to accept payment for specific transactions such as lottery tickets, nonprofit donations, and high-value items like jewels.

When in doubt, get approval before selling these items to avoid a hold being put on your account when you don't expect it.

Minimise unauthorised transactions

Unauthorised transactions are any transactions made without the consent of the account holder. To minimise unauthorised transaction:

  • Be cautious with suspicious buyers.
  • Only send a package to the account holder's address even if they ask you to forward it to a different address.
  • Capture proof of delivery information to ensure the item was received.
  • Require signature confirmation for high-value items.
  • Verify a duplicate transaction to avoid having the second transaction disputed.
  • Contact the customer to confirm the order before shipping.

Mitigate “Item Not Received” claims

Fraudsters will often seek to avoid paying for an item by claiming they didn't receive the item. Too many of these claims can make your account look high risk, leading to limitations. Avoid “Item Not Received” claims by:

  • Confirming an order with the customer before it's shipped
  • Adding shipment tracking to all orders
  • Adding proof of delivery and signature confirmation to orders
  • Adding shipping insurance

Reduce “Not as Described” claims

Make sure your product listing has accurate written content, high-quality photos, and product dimensions, so that customers know exactly what they are buying. Also, give customers a way to reach out and ask questions about an item before they buy to eliminate misunderstandings. Reduce claims by:

  • Avoiding hyperbole in product descriptions
  • Adding photos of the product from several angles
  • Encouraging customers to call or email with questions before they place an order

For complete information about Account Limitations, visit our User Agreement.

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