I have been using paypal since ebay purchased them(about 10 years). Over the years I have heard many complaints. I have given advice to many(keep funds in the account, don't do anything to appear shady). All of this advice worked well until last month, paypal froze up my own account. It was very frustrating, but I got it cleared up in 7 days. Here are a few things that I learned.
Paypal has one of the smartest computer systems in the world, designed to spot fraud. If your volume has a dramatic increase, you take excessive cash withdraws, possibly sell fakes, cannot prove where you you got your product. Or you were not honest when you signed up for the account, then you can plan on paypal freezeing up your account.(even if you are Verified, and have used their service for 10 years) Paypal will require proof of who you are(ID and credit check, and a credit card), proof of where your product came from(manufacturers invoice) proof of the location of you, and your product(utility bills, deed, lease etc.) Paypal WILL hold your funds until you provide all of this info. At first I was mad, but ultimately this policy protects paypal, and runs off fraudlent sellers. My only complaint is I wished that I knew all of this info ahead of time, I run a "legitimate" business therefore I was back up in 7 days, if I would have known the rules I would have already provided the info. By the way if(when) this happens, paypal will investigate every item that you send them, and from what I understand when this happens, you are safe from it happening again.