it's legal because PayPal is technically not a bank.
http://en.wikipedia.org/wiki/PayPal#Bank_status
It depends on where you are, in the EU it definitely is a bank.
I mean, let's drop the literal-mindedness for a second. It's my money. They are holding it hostage. I want it back. They should not be allowed to do this.
Still nothing wrong with the situation, in your opinion?
As a buyer, you want this security so that you can pay a few thousand $ without the fear of getting nothing in return. As a seller, you have to treat the 21-day float period as a cost of doing business, or else impose less generous terms of your own (and see less interest from wary buyers who do not want risk). In the business world suppliers are often expected to provide 30 or even 60 days of credit to commercial customers, and dealing with this is the essence of cash flow management.
It seems you want all the benefits of having your money instantly, but that someone else bears all the risk. The opportunity cost of the 21-day wait is the risk premium you pay for access to a large marketplace.
http://news.ycombinator.com/threads?id=anigbrowl
He's like this all the time.
In my opinion their rules are exploitative and out of line with what I would expect from a company that I would do business with. (Edited to remove 'out of line with what rational people expect' comment, I do not presume to speak for anyone.)
In fact, he is not wrong to expect that reasonable regulation be imposed on a company which borrows and handles funds. Paypal's system is highly unusual in comparison to other comparable banking services and is predictably often the target of these types of complaints.
Florian says the law is wrong, that paypal should be regulated as a bank. In response, you reject regulation in general. His position makes a lot more sense than your own.
"Cost of doing business"? ROTFL, I'm just a dude selling a handful of trinkets and baubles on eBay, once in a blue moon.
Your argument is like one of those math "proofs" that make sense internally, but are stemming from axioms utterly divorced from reality. You could "demonstrate" anything that way. You could even "demonstrate" how PayPal is "right" to keep my money for no good reason, or how Sony is "right" to have me waive my rights to sue them if I use their product. When they do it, it's called "EULA" and "cost of doing business" or some other kind of standard boilerplate bullshit like that.
But let me try the same tactics on their skin. Then it's called "theft" or "piracy" and I go to jail.
And what's the difference? They own immense quantities of cash, out of which they can afford to pay armies of lawyers and lobbyists, effectively superseding the law. I don't have that much cash, so I must dance to whatever tune they like to play.
All they have to do is couch this behavior in intricate pseudo-rational arguments like yours, or lofty but flawed rhetoric like you see all the time on TV, and "all is well" with the world.
This is bullshit. It needs to stop.
PayPal provides a service and you are getting benefits from it at a relatively low cost. They are taking risk on from you selling stuff that is making them very little money (trinkets and baubles, as you described).
I'm not saying PayPal are a bunch of saints, or that they don't have some policies which aren't right. As a musician, I find the situation described in the article to be abhorrent, and it's behavior like this that prevents me from using PayPal except as a last resort. But what you are saying basically boils down a temper tantrum about how things should be different. Well, if you have an idea as to how to do this in a way that doesn't bankrupt you, there's your entrepreneurial opportunity. Go change the world.
They're not superseding the law at all. You have no automatic legal right to enter a private marketplace; if you want eBay/Paypal's low fees, you accept their conditions. If you want the full-service luxury treatment of an established auctioneer like Sotheby's, then you pay their huge fees. If you want the no-questions-asked simplicity of a flea market, then you rent a table and stand in the cold for hours.