Beware buying PayPal My Cash cards

Those who enjoy earning credit card rewards can’t help but be tempted by PayPal My Cash cards.  These little seductresses can be paid for in many stores with a credit card.  Each card can be loaded up to $500 at a time with only a $3.95 fee.

PayPal My Cash Card

PayPal My Cash cards are ridiculously easy to use for running up credit card spend.  You can buy these with a credit card; load the funds to your PayPal account; and then retrieve the funds in a number of ways: transfer to your bank account; send money to friends; spend the funds with a PayPal debit card (load Bluebird or Serve, for example); etc.

It’s a nearly perfect Perpetual Point Machine.

There’s one little problem…

If you do this, you’ll get shut down.  You’ll eventually get a nice little email telling you: “Your account has been limited.”  At that point, you can log into your PayPal account, but you can’t actually do anything useful with it.  You can’t even withdraw any funds that are there.  If you inquire, PayPal will tell you that your funds will become available after 6 months.

Don’t do it

It’s so hard to pass up an easy credit card spend opportunity like this one, but I strongly recommend against it.  I’ve been there, done that.  And, yes, I’ve been shut down.  Worse, my innocent son’s teen account was shut down too.  His funds were also frozen.  This happened to us last year, but recently I’ve heard more and more reports of it happening again.

Here, for example, is one recent reader report:

Just a warning from my hard learned lesson.
Don’t use Paypal My Cash cards for your account EVER.
I had two warnings that the CSR explained were due to moving funds from My Cash cards to PP to my bank.
Fast-forward 6 months and I bought about 3K more to use for real purchases on eBay. All was fine until 4 months later PP permanently limited my account.
CSR said it was for my use of the cards 8 months back.
Appeal denied.

For visual learners, I’ve slightly modified PayPal’s flowchart showing how these cards work:

PayPalMyCashFrozen

See also: How to cash in your PayPal My Cash cards when PayPal freezes your account

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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  1. […] PayPal offers a convenient service for sending, spending, and receiving money online.  They also offer the PayPal My Cash card which can be used for manufacturing spend.  It’s possible to buy My Cash cards with credit cards, then load the money to your PayPal account, then withdraw the money in various ways.  For those seeking credit card rewards, it sounds perfect.  Unfortunately, PayPal will almost certainly freeze your account if you do this often.  And, when they freeze your account, they won’t let you use or withdraw funds for 6 months.   I recently warned people away from this technique in the post “Beware buying PayPal My Cash cards.” […]

Comments

  1. Didn’t they shut down your wife’s paypal account a year or two ago? This isn’t your account getting shutdown, and something that is circulating on flyertalk?

      • Please clarify this Jethro. If one has an actual PayPal credit card then one can use these PayPal immediate cash cards to move money around without fear of shutdown? Can you clarify and do some more for me please. Also does a premier account work the same as a business account with PayPal?

  2. I gotta chime in since I just went through this last week. It was extremely frustrating since I am ramping up on resell opportunities, and had close to 5k I wanted to withdraw. I was able to get the hold lifted, but I will NEVER load a card again. The load in question was from July, and it was only 2 cards to help get the 5x bonus for gas on my Chase Freedom. They are extremely uptight about this action, and it’s best to just forget about it.

    • Look at the terms of the card, they are meant for online shopping only not to be withdrawn to your bank. Its your fault this happened.

      • Rite these cards have me so frustrated,my boyfriend has been trying to load the my cash wit a loadable pay pal pack card saying it can be withdrawn I have order the prepaid card an the master card neither of them work they tell me it can’t be withdrawn that’s call money laundering..But my boyfriend don’t believe it he say he been doing it maybe this is why the account is frozen!!? Someone help cause this is frustrating!!? Thanks

  3. Does anyone have data points on being shutdown for purely legitimate spend. As in, no cash withdrawals of loaded funds only debit card purchases (non-pin transactions).

  4. Is there danger even if I’ll never withdraw the funds to my bank account?
    Rather, I would only use the funds for ebay purchases or purchases with my paypal debit card?

  5. @Ben, yes my friend Alex had nothing but real spend. They shut him down, he won on appeal and then shut him down a month later. I was told that bottom line is you cannot use the MyCash cards with the debit card for any purchases.

  6. Great post. People really should stay away. There have been so many data points of shut downs with PayPal for quite some time, yet people still try it. As far as MS goes, I don’t touch PayPal with a 39 and a half foot pole.

    • They use these for people to post Cash. Remember, most of the things that MS use are actually designed for the under-credited. Those who have cash, but may not have credit history do not have as many options for banking, etc.

      If you have only cash and want to buy something from eBay.. what do you do? This is the need that most of these programs intended to fill.

      • That’s exactly right. All of these MS techniques that people are making money on are just loopholes that the banks either didn’t think of or don’t care enough about to close. They are not in business to make us money.

    • The issue is using the funds from any method of cash load – whether from the Paypal reload cards or even from your checking account – for loading any other “cash” product (i.e. Bluebird, et.al.) or simply withdrawing the funds. The Paypal compliance department considers this to be a “money laundering” activity.

      Any legitimate retail purchase or transfer to friends and family is considered to be a valid and supported use of your Paypal cash balance (even if this balance got there by loading all $4K/mo using Paypal reload cards).

      I knew not to use my debit card to withdraw the money at an ATM, but I had no idea that loading my Bluebird card using my PP debit card was a violation of their policies. I’ve been doing it for a long time and only just this week got flagged for it, so it may be a recent change in either policy or enforcement.

  7. Why companies create these products and then punish people for using them is beyond me. I never used this method, but sympathize with those who have.

  8. Is the assumption that it’s safe to use until you get a warning? I have been loading small amounts and spending via debit card for about 6 months.

  9. I’ve had luck (so far, knock on wood) with purchasing MyCash cards, loading them to Paypal, then using the PPMC as the funding source into Serve (as the debit card). No trouble so far, and this is going on over a year. I do, however, get paid from many different sources via Paypal, so that can’t hurt either.

    I have been warned in the past about reloading then immediately withdrawing all the funds, so if I let it sit for a day or two or even do a purchase with the PPMC (no matter how small – even a candy bar) they seem to be ok with it.

    • I thought the same thing, I did the same way, even better, I used ebay CC linked in my PP to use as backup funding source. And I was using PPMC loads to pay off my eBay CC there. Mixed with a lot of eBay sale transactions. Also used PPDB to online load RB,BB,Serve.
      But be warned: your day will come if you continue doing this. One time warning from paypal is the only warning you get. Next time they come at you, is a complete shutdown.

      My two PP was gunned. Now I’m starting from scratch, just hoping to get a PP for ebay deals…

  10. Forget about ms I actually had problems using the funds for normal purchases. It must be an inside joke that they call the cards mycash. It should be ourcash because that is how they treat it.

  11. What is an ‘appeal’ people do after shutdown? I used to load mycash cards on both mine and wife’s accounts. Wife’s account got 2 warnings first, after which I stopped loading on her account. Anyway, PP limited her account after some time. Since I only got one warning, I stopped completely using mycash cards because I need my PP account for ebay purchases.

    Now, it’s been more 6 months after PP limited my wife’s account. She doesn’t have any funds here. Is there a way to appeal PP decision to limit her account? If yes, how does it work?

    • No way to “appeal” for such limited account. Such limit is basically shutdown. PP says you can withdraw your funds after 6 months of limit, but then you still cannot close your account. They keep your info (name, address, ssn, credit cards, debit cards, bank accounts) there for years, if not life; so that a match of some/any info of what they kept and that in your newly generated account, you get shutdown of that new account too…

      Got a warning, then never load PPMC and unload it using whatever fast amount methods: loading other prepaid accounts, withdrawing to banks, buying money orders, etc. Or even safer practice – JUST DONT BUY THESE SUCKERS

      • I was able to appeal and have my account reopened. This was last year. I was doing it on two accounts. We had to provide a bank statement, DL, and I think a few other bits. The whole process took about 1-2 hours on the phone and about 10 days waiting time. It was a real pain and I stopped immediately loading with paypal cash cards.

  12. got shut down with my and 3 other family accounts, had to file bbb to get my money back in advance from their 6 months rule…if you got shut down and still have some cash cards left, you may ask for refund in check, takes about another 3-4 weeks.

    • I have 2 cards that they are refusing to let me load. They told me I have to file a police report against myself for fraud on my account.
      Is there any other way to get my money?

  13. This is all fairly crazy. I use PP for eBay selling and then transferring money to my bank or the occasional purchase. It seems to me that if they sell the card to load your account, then if they want to not have you do something, they should put in the system to prevent it from being done, not shut you down and keep your money for months on end.

    I am not a lawyer (One of my kids is though!) but I think there would be the basis for a lawsuit, or at least a small claims court if they try to keep your money for months on end. What is the legal basis for that to be done, anyhow?

  14. They are fascist bankers and have had “many” court cases they lost and they still keep doing it. My response is to never use eBay or Paypal Ever!

  15. No problem for almost a year. Loading to the maximum for the first 8 days of each month. At the end of the month a bit more than a half is used to pay my rent via PPMC. The rest is transferred to my or my friend banking account. None had any issues. We even used it to load two accounts and send money to each other, like Amazon Payments before. Also ok.

  16. I would imagine that’s how money laundering works. But PayPal cards with cash and transfer to bank.

    They can’t trust you just because you say you are not money laundering. Question to you: would you rather live with a terrorist attack on the USA or have easy way to MS so you can enjoy nice travel?

    • I’d rather have an easy way to MS! The current batch of terrorists which are a threat to the US don’t use banks! They have their own parallel banking / finance system set up where they exchange and send money back & forth. Now, there are plenty of illegal money laundering operations out there which DO use US banks and methods similar to manufactured spending. Realistically, they’re not going to be sitting at a Kate reloading Bluebirds all day.

      Re: Paypal — They’ve long-acted as a pseudo-bank, but have done everything possible to skirt the regulators. They’re notorious for freezing accounts and illegally holding onto funds. PayPal’s gotten into trouble quite a few times for freezing accounts and several court cases have ruled against PayPal for this, but that hasn’t stopped them. Basically, I try to avoid PayPal and eBay as much as possible and suggest others do the same.

  17. I don’t see what is the problem if you do this

    1. Buy PayPal
    2. Load PP on PP account
    3. Drain account by sending payment to friend

    This is open loop. After all, what’s the point of buying PayPal My Cash if you cannot do the above ??

  18. Question to those that have been shut down.
    1) What is the smallest amount you have been shut down for, or did you max the $4k a month?
    2) Did you immediately withdraw to a bank? How long did you wait?
    3) Did you make any other payments to other paypal members (like the intended use.)

    • Same question here. I consider myself lucky to have been doing this for 2 accounts for > 1 year without a problem. I do exercise moderation (i.e. $3k instead of $4k load per month), but supposedly not as moderate as others who were shut down.

      From what I gathered, people’s experiences really vary and there doesn’t seem to be much logic to this.

  19. well all I use paypal for is PPMC card loads and paying for stuff online via PPBDC. I don’t have a CC or bank account linked to them. It will be a sad day if this comes to an end, but I’m really happy that it’s working now.

  20. Paypal is always into some seriously sketchy shit. I have had just under 1k frozen in my account there for over eight years for no given reason.

    • Eight YEARS??? That’s crazy! I woulda lawyered up or taken them to Small Claims after a few months. Why did you let it go on that long anyhow?

  21. I guess I am lucky. For the past year I have been loading 2k a month, then cashing out by loading to redbird, buying a money order, or getting cash back via PP debit card. I have never had a problem.

  22. Over the years, I think I bought 2-3 of these off ebay from 3rd parties. Each time I just transferred the amounts to my bank account. No problem.

    But they were small amounts.

    I had an unfortunate go around with paypal once when I went over on my ebay giftcard spending limit and was unable to use them for a number of months.
    I opened a 2nd acct and was able to use some unapplied cards there.

  23. I used just one mycash in my pp act and loaded some of it onto redbird with ppbdc and the rest was transferred to a friend, months ago. Just got a warning email. All it takes is one.

  24. Googling “PayPal sucks” will bring up dozens of sites and forums from 1000’s of people who have been screwed over by the unscrupulous business of PayPal

  25. Can you open another Paypal account only for legitimate ebay purchases under different user id once you get shutdown for PP cash activity?

    • It worked for me. I wasn’t sure. But It worked. I still have the 2nd account but don’t use it.

      I asked paypal in advance and told them what I was doing just to make sure. I didn’t want to make things worse.

  26. anyone able to successfully get refunds on PPMCs they had already bought but couldnt load due to PP limiting acct?

    I cant do anything on the PPMC site, I keep getting this damn annoying error.

    JSONObject[“ID_Token”] not found.

    any help would be appreciated! got a couple cards which I cant return, dunno what else to do.

  27. This whole article is BS.

    First of all, you can’t buy these cards with a check or credit card. If you somehow managed it, you likely already committed fraud right off the bat. The reason is exactly to prevent the practice described here, which would be an easy way to commit credit card fraud.

    Second, the whole point of these cards is to load your account with funds to spend via PayPal, not to transfer to your bank account. Making a regular practice of doing that is screaming “fraud” pretty damn loudly. The surprise isn’t that you were shut down, it’s that it took as long as it did.

    Somebody who uses these cards in the manner intended will not have any problems with PayPal as a result.

  28. I’ve got an ideal, use the cards as they were intended. I sell items on Ebay and here locally. When I sell an item locally, I buy a My Cash card and add the funds to my PayPal account to use on Ebay, Amazon etc. If you’re going to put money in you bank account from your Paypal account, why not just put it in the bank to begin with? You can purchases paid for through PayPal from your bank account. Just a thought, and based on my own experiences. I’ve found out too that once you purchase a My Cash card and apply it to your account, if you reload it like I do, it automatically goes into your account without having to do anything. No logging in, giving PIN off card etc.

  29. Mycash card is so ridiculous…

    I paid cash + a activation fee so I could pay a purchase on Ebay USING paypal…. Yet they have a limit on how much you can transfer per day… Which they do not mention on the card itself.

    Then you get home to find out they need to verify you after you have already been verified before.

    I found a way around this, I had to use another web browser (FIREFOX) to get my funds into my paypal wallet… After spending 3 hours looking for a way to use my funds that I paid for….

    This is completly unacceptable. They sale this card as an option to not use your bank account (they advertise this on the card)… yet they limit how much funds you can transfer per day? But they leave that part out until you get home and find out there are no refunds… Complete bull crap.

  30. I get it about the PayPal cards, it used to be so easy to reload them, Green Dot had their reload cards everywhere. Now it’s almost impossible to find the PayPal My Cash cards in any store and I live in Los Angeles. It’s not the stores fault though, I talked to several Managers and they told me that PayPal is not sending the cards to them. Typical PayPal since they married Ebay. Now as far as loading cash from a reload card and then taking it out from your PayPal card is highly suspicious especially when it’s large amounts. What’s the point of doing that just keep the cash don’t pay a fee to buy one of the PayPal my cash cards. I transfer funds from my bank now since I can’t find the damn reload cards anywhere, I use the card solely for 2 purposes, to buy from Ebay and to purchase items at the grocery store or even using it to purchase things from Amazon. I think that’s what PayPal had in mind, not to use is as a cash dispensary. I’m big big defending these idiots but I kinda see there point. I have had as much as $5000.00 on my card and used it just for purchases and I have never had my account limited or frozen. The big problems I have with them now is that for a company with billions in assets they have not issued cards with the new security chip, talk about dragging their feet. And another is the time it takes for transfers from your bank to PayPal, it happens quick with the bank but PayPal drags their feet on this too. I can transfer money to the care taker of my property in El Salvador in the afternoon and that money will be in his account the next morning, why can’t the most disgusting entities on this planet (PayPal, Ebay, and Banks) figure this out..

  31. Look at the terms of the card, they are meant for online shopping only not to be withdrawn to your bank. Its your fault this happened.

  32. First you can buy this card with anything other then CASH!

    Second if you load money onto this card with cash and then load it into your paypal and then transfer to a bank you are throwing a red flag! The only point of doing the above if to launder money. Sure I can see once or twice if you sold a car or something valuable. I have loaded thousands in cash cards and loaded my paypal up. I use my paypal debit card to make purchases and have never had an issue.

  33. The article is not even true. the MYCASH cards, can ONLY be purchased with CASH!!! (thus the term “mycash” card…it’s for people who don’t have credit cards but want to add funds to their paypal account, duh) Been using them for years…they are not supposed to be sold for anything except cash. I know I can’t purchase them with a card…if you can, your vender is selling them illegally. Proceed cautiously.

  34. it’s probably because of idiots like you, that they can no longer be purchased…and I only hope it’s temporary. I blame crooks always trying to “one up” a good system, and thus breaking it, for losing the cards.

  35. My personal experience is this…if you can’t accept the risk and consequences then do not do it. I have personally had my PayPal account permanently banned (limited) because I did something that I was not aware of was against their terms of service. It was involving business transactions which were on their prohibited list. I was lucky enough to be able to create another Paypal account and spend money with it. I haven’t tried to receive payment and probably will not try to receive payment. This is significant because if you haven’t noticed if you try to create another account with Paypal you still have to input personal information to create your profile such as social security number and phone number which will flag in their system.

    So, if you are willing to risk getting your Paypal account restricted for cash rewards or points it’s your prerogative but being that I actually had my account permanently banned I will agree with Boarding Area and advise against it. You may think losing Paypal is nothing until that certain store doesn’t accept your card or only accepts Paypal and you cannot use it. Yes, it even affects your purchasing power, if your frozen account has that card linked to Paypal.

  36. Seems like they are doing it again for a lot of people, my and wife got warning email yesterday. We had to fill a online affidavit after which a/c were unlocked.

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