PayPal Verification Is Crippling Cashflow

[Gio1052]

Hi all,

So I'm getting a little bit desperate now and I was wondering if anyone here had experienced this same problem and might be able to offer some guidance.

I have a PayPal account that i've used for around 4 years as a sole trader, to accept funds from my website. We've recieved circa £50,000 turnover through this account since 2012. I've just registered as a limited company, and have updated my account accordingly, and out of the blue PayPal have completely restricted my account due to some EU anti-money laundering iniative.

No warning, nothing. I've now got a series of subscriptions that aren't being paid (because I can't pay out funds) and I have a huge amount of my monthly turnover locked away in PayPal, which is cripping my business. In fact, it might sound drastic but as we use PayPal exclusively for our online income, and as we're a 95% online business, it could put us out of business if we can't access funds this month. I've completed everything on the 'to do' list from PayPal but yet it always shows as 'Awaiting Response' in the resolution centre. Today, after more than a week of waiting, someone from PayPal got in touch asking me to confirm my business address saying I can't use a virtual office and that they require proof of an actual trading address.


My problem is that I don't have an actual trading address. We use a virtual office for all mail, including our company registration. It's directed to a private address. I'm happy to confirm my private address (and have already provided photo ID to do so) but I have absolutely nothing to prove to PayPal the business is linked to the residential address, as it all goes straight to the virtual office address and gets redirected. Even my Director's address is linked to the virtual office to keep my residential address private.


How on earth can I fix this problem before it puts me out of business? I've called them and been on hold for 2+ hours at a time without response, have messaged through Facebook and via e-mail and just get a stock response asking me to confirm my business trading address with HMRC headed paper, but that it can't be a virtual address?

I thought given how open the UK is with Companies House etc there would be no problems here, because everything they need has not only been confirmed by me but can easily be checked from Companies House. Had I had any warning this was pending there wouldn't be such a problem, but it all came out of the blue when I 'hit the button' from Sole Trader to LTD.

Many thanks all.

 

[Mr D]

Provide them with what they need to save your business.
Get what they need changed over to your address, use that as proof. Though if you are relying on everything being sorted this month you may be disappointed.

 

[Gio1052]

Thanks Mr D.

I will be livid if I have to change my business registered address - all of which is perfectly legal to be with a Virtual Office for ease and convenience (as I move around alot), and has been printed to letterheads etc - just so PayPal can complete a stock KYC.

They have my residential address verified - I've provided passport and driving license, and I'm the sole director listed at Companies House. They're insisting I have something from Companies House or HMRC with my 'trading address' and that it can't be a virtual office, but shy of changing my registered address to a residential address, which will take considerable time and cause all manor of issues, I can't really achieve this?

 

[james_firmsites]

If your using subscriptions then change over to gocardless. Better support, massively lower fees and quick to setup.

 

[Gio1052]

Thanks James. I pay via PayPal on a subscription basis for a number of other services, some of which won't accept card payments and use solely PayPal. I have a number of suppliers coming back to me telling me monthly subscriptions or authorised payments aren't being cleared. We use PayPal for online payments, and we also accept Stripe but 95% go with PayPal.

 

[Mr D]

Its up to you. Comply with what they want or don't comply - which one costs you more?
Remove your emotions from the decision, which one moves your business forward?

 

[Gio1052]

Thanks Mr D.

My emotional response is to try and completely remove every service away from PayPal, and hound their complaints line - but I know this won't achieve everything. My major grievance is the lack of notice. The website has been telling me for a week to resolve issues with my account, but when clicking the resolve button it's then telling me everything is sorted and my account is fully approved.

It's the lack of ability to talk to somebody and explain the set up / circumstances - and the urgency - that is the biggest issue here. I'm hold now - and have been for 2 hours - trying to speak to someone.

The time it will take to update our business address and for HMRC to send the necessary documentation will be substantial wouldn't it?

As I say, very happy to comply and fully understand their requirements under EU law / anti-money laundering etc, but I'm wondering why they can't accept the current set up, which must be common place?

 

[james_firmsites]

Thanks James. I pay via PayPal on a subscription basis for a number of other services, some of which won't accept card payments and use solely PayPal. I have a number of suppliers coming back to me telling me monthly subscriptions or authorised payments aren't being cleared. We use PayPal for online payments, and we also accept Stripe but 95% go with PayPal.

Well there is nothing stopping you paying your suppliers using the guest checkout (just remove that card from your actual paypal first or it will throw a hissy fit) then receiving money via stripe or another service.

If your charging people subscription, ie the same amount coming in each month/week etc from lots of people then gocardless is so much easier to use. The users just setup bank account and sort code numbers and away they go, you get a nice little interface saying when the payments are collected and best of all they charge 1% flat fee which blows paypal out the water.

But failing that, just use stripe. If you have no problems with paypal you're fine but if your one of the unlucky ones who does have an issue then you can be really screwed. About 10 years ago as an in house developer I was tasked with speaking with their customer service about a problem, it took literally every day, all day, for 4 days to get it resolved. Their support has always sucked.

 

[Paul Norman]

Paypal is a faceless, process driven machine. You will have to do exactly what they ask, and it will take the time it takes. You have literally no choice if you want to free up those funds.

Using paypal exclusively puts you at risk. They may well do this again in the future, if their process spits out a need to.

 

[MartinCivil]

I think your problem could be that if Paypal don't like virtual offices, for whatever reason, you have two options. Ditch the virtual office, or ditch paypal.

 

[Nochexman]

...we use PayPal exclusively for our online income, and as we're a 95% online business, it could put us out of business if we can't access funds this month. ...

This. Don't rely on PayPal for your payments - ever.

Paypal's merchant support is our primary source of new business.

 

[Mr D]

Yes, time to update your business and provide docs from HMRC to paypal would be at least a week or two. Then paypal time to deal with it. Add in a royal mail strike while you are awaiting docs.

Had to do stuff with companies that really annoyed hell out of me. Had to focus on what moved the business forward - personal isn't the same as business.
Have had to do what I find personally bad to provide my shareholders with an ongoing company.

 

[Gio1052]

Thanks everyone for your responses - really appreciate the support. I think I will need to examine other avenues after this is resolved.

The stock e-mail I've received telling me I can't use a virtual office address and requiring something from HMRC that shows' my trading address directs me to a page with an upload box and room for 60 characters of comment!

I have no problem complying with regulation but the stock approach and inability to have a conversation with anyone is sickening. Never really had a problem before - they've always been a bit poor, but generally speaking PayPal is widely recognised and has been OK. I would have no complaints whatsoever had they told me I'm approaching a threshold or limit etc, and need to resolve prior to that - but to just lock me down at the start of the month has absolutely crippled us.

Really am in a sticky position!

 

[Mr D]

This. Don't rely on PayPal for your payments - ever.

Paypal's merchant support is our primary source of new business.

They can be OK.
Have had trouble with another card processing company in the past - and no trouble like that with paypal.
Virtually every card process company I have looked at has had horror stories.

 

[Gio1052]

I just can't believe it's such a sudden issue. As a sole trader with absolutely no tangible proof of who I am, or how I trade, they've allowed years of unchecked turnover to be paid and transferred out. Now we're an LTD and fully checked and registered with Companies House it's a massive issue!

 

[Mr D]

Thanks everyone for your responses - really appreciate the support. I think I will need to examine other avenues after this is resolved.

The stock e-mail I've received telling me I can't use a virtual office address and requiring something from HMRC that shows' my trading address directs me to a page with an upload box and room for 60 characters of comment!

I have no problem complying with regulation but the stock approach and inability to have a conversation with anyone is sickening. Never really had a problem before - they've always been a bit poor, but generally speaking PayPal is widely recognised and has been OK. I would have no complaints whatsoever had they told me I'm approaching a threshold or limit etc, and need to resolve prior to that - but to just lock me down at the start of the month has absolutely crippled us.

Really am in a sticky position!

May have been easier to open a new paypal account for the limited company. Then there would have been a limit (£1900?) to get verified by. You being well over that limit and switching this account from one legal entity (you) to another legal entity (company) may have messed up. Have never tried doing that with paypal, my personal and company accounts have always been separate.

 

[Gio1052]

Thanks Mr D, and everyone for your help. Nice to have a bit of support rather than endless PayPal hold music.

I really didn't think we'd have this sort of issue. I assumed as I had used the primary business e-mail and PayPal account under the name of the business (as a sole trader) that switching to LTD would require some information - all of which being legal and above board - would be easily checked and sorted.

Seems absolutely crazy but yeah - wish I had set up a separate account now!

 

[MartinCivil]

Would suggest that you look ASAP at your cashflow and what measures you need to get in place to ride this out.

 

[Gio1052]

Think you're right Martin.

I might need to switch off PayPal payments from across our three websites, and from within our CRM, and try and secure a larger overdraft. Just to really compound issues, whilst we've secure a small £500 opening overdraft on the LTD bank account, there's no way they'll extend us a larger overdraft until they can see the full extend of turnover and income we're generating!

The plot-thickens!

Rookie mistake of trusting PayPal to resolve everything when this first started might have been grave.

 

[Gio1052]

Just to be clear, this is the stock text I received last night after more than a week of believing everything was OK, as my account shows as fully verified;

Update Business Info:
----------------------------------------------------------------

During a recent review we noted that your business registered address is associated with a virtual address. To comply with EU Regulations we must verify the physical address of our customers' businesses.
You need to provide us with a government issued document to show your physical business address.

We can accept the following government issued documents to confirm your physical address:

• A Revenue letter or tax demand issued in the last ## months.
• A copy of a business registration document issued by the government, the Chamber of Commerce or Companies House.

The documents should be fully legible and must include the company name, number and physical address.​

 

[fisicx]

The reason they no longer accept a virtual address is because they are used by so many fraudsters. PayPal doesn't really care about your loss of business, all they care abut is keeping the EU investigators off their backs.

What address did you use on the CH registration document?

 

[Gio1052]

Thansk Fisicx, had no idea this was a big problem. Presumed all companies offering virtual address are required to do a KYC on client. Registered address is the same as the virtual address. It's a Kemp House 160 City Road address supplied by a formation company. Have invoices etc from them, confirming my correspondance address and the limited company details, but think it's going to be largely useless

 

[Gio1052]

I'll update this thread when this is finally resolved one way or another for any other desperate souls in the same position. I've found via the formation company's portal our Full Company Register, which details all of the company registration details, addresses etc as the Virtual Office, but also the director's private address - hopefully this will do it! We'll see!

 

[MartinCivil]

Presumably switching off PayPal wont have that much of an effect, if you also have stripe there available. Most people may use paypal if they have an option but take that away they wont have much choice. A £500 overdraft wont get you far, we've just reviewed our overdraft and took a good couple of weeks to get resolved.

 

[Gio1052]

Thanks MartinCivil.

Most of our funds are locked up with PayPal. We can turn off payments via this channel through the website and hope people are still confident with the other methods available, but it might be a little too-late

 

[Chris Ashdown]

Sorry but I am on PayPal's side on this matter, if I had a dispute with you and had to take it to law you are hidden away and it would rely on the virtual office being able or willing to give me your real details

The reasons for remaining hidden is up to you but in this case it looks like PayPal is protecting the buyers, which I am all for

 

[fisicx]

Thansk Fisicx, had no idea this was a big problem.

It's a big problem. Many companies are registered with virtual address or similar discover they end up with bad credit references or are refused credit because the address is shared with all sorts of dodgy companies.

 

[Gio1052]

Sorry but I am on PayPal's side on this matter, if I had a dispute with you and had to take it to law you are hidden away and it would rely on the virtual office being able or willing to give me your real details

The reasons for remaining hidden is up to you but in this case it looks like PayPal is protecting the buyers, which I am all for

There is nothing to hide here. We openly publish our correspondence address (which is my private address) via our website and are registered with every statutory body we are required to, including several trade organisations that are not compulsory, but with whom we want to be registered to ensure we're doing everything correctly.

The virtual office address is used to allow us the flexibility to move home, or afford us a bit of privacy from sales persons etc, without having to update numerous records every time this happens, and without having to bin all of our branding etc. We don't have any trading offices - it's my self working from home, and given I have children I don't want our address published with the many thousands of directories and companies that pull data from Companies House. With the correspondence address published on our website we have (to some degree) a bit of control over where it shows, when it's the registered address we do not.

PayPal should be protecting consumers - correct. But if they offer a service to merchants they should also have the facilities to deal with disputes or - in this case - genuine support matters in a timely fashion.

 

[Mr D]

Had our home address published on companies house, websites etc for 6 years with old company. Never any sales reps turn up without appointment, never any buyers simply turn up. A few, and it was only a few, we arranged with the buyer to collect from the house. Mostly not convenient in time or location.

Paypal will have its internal policies, most likely set by the board or agreed by the board. And the staff won't have the authority to override.

 

[Chris Ashdown]

There is nothing to hide here. We openly publish our correspondence address (which is my private address) via our website

The virtual office address is used to allow us the flexibility to move home, or afford us a bit of privacy from sales persons etc, .

They contradict each other

 

[Gio1052]

They contradict each other

I am happy to jump through any requirements PayPal have in place, and to verify anything and everything. They have every piece of photo ID and personal ID I can provide, as well as everything the law provides when setting up a company, including letterheads from my business bank, and the formation company.

My grievance is mainly the way PayPal are (failing) to deal with the issue, by just sending out a stock e-mail once a week.

Appreciate your comments and will look at options going forwards regarding company reg addresses, but there is nothing to hide here and everything I have done is absolutely above board, so it's frustrating to have this imposed without any real means to resolve.

 

[Paul Norman]

You cannot speed paypal up. They make no secret of the fact that they do not provide much facility to step out of their automated processes, and you have to go at their pace.

They will get through it, in time, but it is how they work, and how they keep their costs down.

The trick is to know this, and to allow, in our business models, for these system driven gliches, which in your case is having a big impact.

 

[Gio1052]

Thanks Paul,

I think in this instance we've been caught with our trousers down a little, so to speak. Just switching to LTD from Sole Trader, and assumed this would be a positive step, as it would allow everyone to be clearer on who we are etc.

If we can pull through we'll certainly factor in more allowance for future issues.

 

[Nochexman]

I think in this instance we've been caught with our trousers down a little, so to speak. Just switching to LTD from Sole Trader, and assumed this would be a positive step, as it would allow everyone to be clearer on who we are etc.

Hey Gio1052, did you manage to resolve the situation with paypal?

 

[Gio1052]

Hi Nochexman,

Nope - it's still rumbling on. I've been able to provide them with business banking documents from my residential address (as opposed to the virtual address) as well as my director's address via the confirmation of shares in the articles of incorporation, but they're still just sending me generic e-mails.

System still shows as my account being fully up to date when you click the 'resolve issues' button, and I've spent a total of 18 hours on hold over 5 days, never with any luck.

Really bad experience with PayPal, we'll never use them again. We're now working with Stripe payments which is more flexible. This month will be extremely tight as around 40% of turnover has been locked up by this account verification, but we should just scrape through.

I honestly don't know if we'll ever see that money again though - not until we move from the virtual address, something I don't think we'll be able to do for many years (as we don't earn enough to afford offices yet)

 

[Gio1052]

FINALLY RESOLVED!!

Pleased to confirm we've finally had this sorted by PayPal. I had to continue (almost daily) hounding them on Facebook Messenger, as it's the only way I could get through to a real person (the e-mail service just kept sending me generic e-mails, and I tried calling but spent hours on hold every day, with no joy there).

Lots of 'somebody will be in touch within 24 hours' and then nothing, so another follow up and so on. Eventually, yesterday I had a message from a chap named Patrick who asked if he could call.

I said yes, so 20 minutes later he did. He said he had everything required to verify my account, and would get that done up stairs ASAP. I asked about the virtual office address and he said that's never been a problem, so long as they can confirm the Director's identities!

Always thought it would be completely unjust to not allow on this basis. As I've said to others in this thread who have objected, nothing wrong with a virtual address if it's above-board and service providers have your actual contact details.

Either way, 20 mins after the call I had an e-mail saying everything had been restored. I did ask what the problem was and he said it just takes time for a case-handler to look at it. In my case, 4 weeks.

I'm not convinced this would have been sorted had we not escalated over the course of 4 weeks through PayPal messenger - so would recommend anyone else in this situation to do the same.

Glad it's finally sorted!

 

[Nochexman]

Good to hear that is all sorted!

Would definitely be thinking about having a back-up (at least) should anything like this happen again.

 

[MBE2017]

FWIW, withdraw your PayPal income daily or more often, they can close you down anytime, and hold the funds for months. Surprised as an experienced PayPal user you had not done this already, I used to withdraw my monies several times a day.