A seemingly-legitimate customer filed a dispute against you. They might have misunderstood your policies, or are trying to get something for free by obtaining an illegitimate refund. We do not see your account and know why you are limited.
It’s probably best for all of my online selling fellows out there not to use PayPal at all or keep withdrawing your money and don’t leave in there too much. They’re profiting on our sweat aside from their hefty fee and commission. If you are in the business of selling informational or digital goods and your revenues are extremely lumpy, then I would go with a regular merchant account and gateway like eMerchant. In both cases with my blogging buddies, they had their accounts frozen after a big product launch. For one of them, Paypal account limited for 180 days only allowing them to process $10,000 per day.
When you’re in their probation period, they hold your funds until you can show delivery with a tracking number or the like. I’m assuming there’s even more to the story he’s not telling. That’s why you have the chance to review and approve a seller’s delivery before your money changes hands. I will raise a complaint and appeal to them to restore your account back. The complaint goes to their head department to investigate the account and issue a final decision.
You may also find that you can’t receive money, accept payments or add money to your account. I have had paypal for a number of years on my website. Three months ago, PP asked me for a number of answers regarding my ID and Company Documents, which I emailed back to them as requested. Time ticked away, and then there were more questions and then time ticked away, with yet wanting answers in more detail. PP still has $15.5k of mine, not much in the big scheme of things but it’s the principal.
Something that I do like about PayPal is that if you have an online business and do everything right, and someone tries to commit fraud, PayPal protects you as the vendor . Here in Mexico, I know that people have had terrible experiences with DineroMail, as in thousands lost and no customer service person to answer their inquiries. They listed possible 8 ways on why my money was frozen. I’m fine with getting paid by check and not giving any % to paypal anyway. If you are an incorporated business get a real merchant account. The other blogger had over 40K in funds frozen for 180 days.