Well, that certainly sounds like half of a good story.
I've heard enough insane PayPal stories from enough people that I trust such that I have no trouble believing pinksoda.
That is the problem with pay pal. Dealing with them is like dealing with a roach motel: data and money go in, but nothing comes out. A sign of how abusive they are is that you cannot get a telephone number for them. There is no one you can call. No one you can send a certified/registered letter. Everything has to be via email.
Of course, this means that every Patrick, Patricia, Pedro, Paul, or Penelope Welch who leaves a numeral or something off their email address thinks they are pwelch@gmail.com. Or one of their colleagues or friends thinks they are pwelch@gmail.com.
Long story made short, some idiot set up a Paypal account on my email address and now I can't get it off. I've contacted Paypal and nothing came of it.
1) Never solely rely on PayPal for your income. 2) Never keep large amounts in your PayPal account - they can be come PayPals for 6m+ at a moments notice.
This is VERY important to remember. If your business is making a good chunk of change a month you should be able to afford the card card processing fee your self. Get a REAL bank account, preferable somewhere local so you can go in and talk face-to-face with a person if an issue arises- more likely to get results this way. It's also easier for you to get scammed by scammers with paypal, not so much with a real bank as they will fight for you.
I am not saying, "never use paypal". As your business grows and matures make sure the way you handle your finances does as well. If you are able to process cards yourself you can also sell that service to other people or use it in another business venture. Build your empire, not someone else's.
Also hire/lease accountants. If you must use paypal for business ventures buy the business account. A lot of stories I've heard were from people who still used a personal account for their business.
In my case, my account was flagged (the business was legit, but I could understand if they had some cause for concern), but it was such a hassle to satisfy them I gave up. I couldn't talk to a person; I had to send dozens of faxes; I couldn't even email - I had to use a stupid form with a character limit; it was never laid out what I had to do or how many steps remained.
Customer support only gets a chance to prove itself once something goes south, and I get the impression that it's unequivocally bad.
If I am looking at buying a laptop, I don't care much about whether it's a matter of "if" or "when" it breaks, but how the customer service and repair shop handle it once it happens.
PayPal's "customer service" is the Damoclean sword that people fear moreso than the false positives. Because good customer service would be able to ameliorate most of their mess and admit errors on their end.