If they don't like that their service is used for poker activities they are free to dump the customer.

What they are not free to do is to freeze his account and just keep his money.

For two of the three cases mentioned, I'd tentatively agree, but in that particular user's case they probably are free to keep the money for several months to a year after they freeze the account because she was running a business in a field that has a high chargeback risk.

Someone has to pay for the high level of consumer protection that people who pay with credit cards receive. Every entity that is in the chain between the issuer of the credit card user and the merchant that receives the payment arranges it so that responsibility of this falls on someone farther down the chain than them. There is no one farther down the chain that the merchant, so the merchant ends up being the one who has to pay for chargebacks.

There is nothing further down the chain than the merchant so it ends up on them. But a merchant that ends up incurring a lot of chargebacks often also is a merchant that ends up not having the money to pay for those chargebacks, and in that case the entity that the merchant was dealing with for accepting payments ends up having to pay.

Thus that entity will almost always have in its contract with the merchant that they can keep some of the funds the merchant earns in reserve to cover chargebacks. I doubt any court will find such terms invalid. They have a legitimate purpose of risk mitigation, the companies will have the data and actuarial analysis to show that the amounts held in reserve are reasonable for the level risk, and the ultimate purpose is to support the strong consumer protections that credit cards provide.

> Someone has to pay for the high level of consumer protection that people who pay with credit cards receive.

I, the consumer, does, every step of the way. If I understand their fee structure, Paypal takes about 3.5% of any transaction I make with them. (They show this to the merchant, but any merchant is going to have to consider this part of their costs. Some just directly pass it back to the customer. The point is: they make money from the good transactions, and should plan appropriately to deal with the bad ones. And there is CC & interchange fees, too, at those levels…)

>What they are not free to do is to freeze his account and just keep his money.

If the poker league is being run illegally, not only are they free to freeze it, they are required to.

It’s not PayPal’s job to investigate whether a particular game of poker is legal or illegal. That’s why they just ban all transactions peripheral to gambling. If you’re going to use PayPal for poker night, just don’t mention that word anywhere in your use of the application.

A lot of PayPal’s complex enforcement algorithms seem to be merely word matches. Someone I know as a joke said “Kim Jong Un” in the message when he paid for his half of dinner and got his account insta-locked for weeks just like that.

Illegally in what jurisdiction? Paypal's? This client's? These details matter.

Are they required to steal money that was generated by a crime instead of handing that money over to law enforcement? How does that make sense?

Well if that's in their T's and C's that's fine, to a point, but they can't just silently close an account and take money from people. They need to return the money - it's not their job to play police and judge and seize illicit gains, a court has to decide whether it IS illicit and what happens to it first - and to give an explanation as to why they no longer want to do business with them.

I mean not wanting to do business is every business and person's right. But taking someone else's money without a court order or mandate is theft.

You should look into OFAC. They'll freeze your account for withdrawals, but not deposits, and no one is allowed to tell you it was an OFAC hit.

Make no mistake, financial service in the United States is heavily tilted against the consumer, and your service provider should be considered an actively hostile entity.

Every time I've read about someone making a fuss about PayPal freezing their account, as you get into the details of their business, it quickly becomes apparent that knowingly or otherwise, they're doing something risky enough that it triggered something related to terms and conditions that they didn't bother to read. I realize that's just my anecdote, but when you're working with money, there's a lot of boring reading you should do. Quickly becomes apparent why that opportunity to fill a seemingly obvious hole in a market isn't the opportunity you thought it was.

So they’re preventing you from accessing your own money?

For a time they are limiting our ability to transfer money out. We talked to support so we'll see what happens . We only open registration once a year for a month. With our event being canceled (pandemic) we did have a lot of refunds. But we've been using them 10 years prior without issue.