Basically, you can get all you need to know by reading
http://www.paypalsucks.com/ and by searching HN for "paypal". You'll get all the horror stories of how they treat customers and merchants, blocking accounts, freezing funds... through automated algorithms or for reasons that make no sense to the account holders. Sometimes, but not always, those reasons are stated in the terms of service, but some are quite vague and open to interpretation or at the very least unreasonable.