How to avoid the PayPal freeze

Background:

In order to earn miles & points, many people “manufacture spend”.  That is, people find ways to increase credit card spend (to get rewards) while getting their money back.  There are many techniques for doing this, and PayPal is a component of some of them.  Unfortunately, while these techniques are perfectly legal, they are often also used for money laundering and other illegal activities.  As a result, PayPal frequently freezes accounts of those who manufacture spend because they appear to be doing something illegal.

In response to a post about PayPal freezing accounts, an anonymous PayPal employee stepped forward and offered to answer our questions.  In this post, I’ve re-written and summarized answers to four such questions.  More questions may be answered in future posts.

Question: What are the triggers that lead to account reviews?  Are new PayPal accounts more susceptible than older ones?

There are many potential triggers.  Computer algorithms can flag accounts based on things like location, dollar amounts, and frequency of transactions.  PayPal employees can also trigger reviews.  For example, a customer service employee may trigger a review after you contact them or if they need to verify information.  Similarly, a risk department employee may trigger a review if your account has chargebacks, explosive growth, trigger words, or if they receive a report from another business (such as InComm, which produces the MyCash cards).

New accounts aren’t necessarily more susceptible than older accounts other than the fact that they are more likely to require identity verification.

Question: Does Paypal freeze accounts for shuffling money around banks? I use PayPal to trigger bank account bonuses by moving money around between my bank accounts and hoping it counts as direct deposit.

I’m not sure, but the fraud department might see that as suspicious. ACH and Credit Card Fraud follow that exact pattern: add accounts, move stuff around, get a new checking acct or credit card. My guess is that the fraud team can distinguish between bank bonus mining and credit or ACH fraud, but I don’t know for sure.

Question: Is accessing Paypal though a VPN a higher or lower risk?

We look closely at IP Addresses: we check to see if people are connecting from consistent locations and devices, for example.  VPNs can mask those things, so it is possible that your account will be flagged more quickly with VPN use.  That said, I personally always use a VPN.  I think that the protection given by a VPN outweighs the added risk of getting your account flagged.

Question: Suppose someone who has a frozen Paypal account waits the 6 months and then closes that account down. Will they then be able to open a new Paypal account in good standing with their SSN etc.?

Yes, that should work as long as you don’t continue to do the types of things that resulted in a frozen account in the first place.  Keep in mind, too, that each person can have two PayPal accounts: a business account and a personal account.  So, if only one is frozen, you should still be able to use the other one (or to create another one if you don’t already have a second 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. Thanks for sharing this. Good to know about opening a new account after shutdown. I’d be interested to know what kind of friend to friend payments made with a credit card would get your account flagged. Frequency and limits. Same for Fantasy Sports sights.

  2. Paypal sent me the dreaded “stop doing those things” letter about my MSing a year back. So I stopped cold. Months went by. Then they shut me down back in January over a transaction they thought was questionable, which I never actually made (I was now barely doing anything anymore). It was super weird and vague. I wrote to ask them what they were talking about or to resolve it with me and help me reopen the account. They never responded.

    I really hate those guys.

  3. I had an ebay account tied to a PayPal account that got frozen. I removed the PayPal account from the ebay account and tried to tie it to another. But now, anytime I try to checkout on ebay, it says there’s a problem with my PayPal account and that I need to call PayPal. If anyone knows how to clear this (short of new PayPal and eBay accounts), please let me know.

  4. “In this post, I’ve re-written and summarized answers to four such questions. More questions may be answered in future posts.”

    I.E.:

    In the world of socialism, I make sure the truth is hidden and only state what [you fools] think is real. In fact, I really don’t know much about the operations [on an on-line money launderer], having only read articles about the issues.

    My name is “Greg The Frequent Miler”, I have no name, and screw you if you find out my true identity as an [on-line putz masquerading as a journalist with this Silicon Valley digital power….but my knuckles hurt for some reason, and I just passed some gas].

    • This post wasn’t my words: I just rephrased things to protect the anonymous source. However, yes, I’ve opened new PayPal accounts a couple of times. The latest one is just because I need it for things like getting money out of certain cash back portals. I purposely do very little with it because it’s such a hassle when they get frozen.

  5. I have 2 paypal debit cards and have found out that its best to use Visa buxx or plastiq as transaction between ACH to have different types of transactions. I have had the same pattern for over 6 months and i haven’t been shutdown

  6. Sorry, but this post is very confusing.
    Are these answers provided by some anonymous PayPal employee or are they answers provided by Greg?
    In the answers do the “I” and “We” refer to Greg or PayPal?

    Because whoever wrote those answers is a very UNreliable source when it comes to information about how PayPal works. For example, users have been permitted THREE PayPal accounts (personal, business & micropayments) for at least the last three years.

  7. PayPal just recently froze my account due to unusual activity. Never used the account for more than a month before it happened and only 2 transactions were posted. Tried calling them, but they never seem to give you a straight answer, so frustrating. I cannot use PayPal anymore due to a permanent limitation.

    I was wondering, do you think creating a new account would be safe? I read an article on Auction Essistance about creating a new stealth account, but is it legal?

    • Yes, you can create a new account. It doesn’t have to be a stealth account (I don’t even know what that is). You can simply use a different email address but still use your real personal info. One recommendation: never keep a balance in the new account. That way if the new account gets frozen, you won’t have any money tied up.

  8. I also came across the term “stealth accounts” too from Auction Essistance, but seems pretty risky.

    I tried opening an account under details that I was suspended under before because I needed to make a payment, but the limited the account and reversed the payment almost instantly.

    Not sure if stealth would be the only other way to go now.

  9. I tried using 3 accounts under my name and they all got limited because PayPal said they don’t allow multiple accounts for one user. I thought you can have as many as you want, but guess not.

    However, I did have Auction Essistance help me open up a business account under the LLC I registered and used the EIN to solve the tax ID portion.

    Was created with no information similar to my previous limited account, so I am hoping I don’t get frozen in the near future.

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