Common PayPal Dropshipping Issue & How To Avoid It (Bizathon4 Episode12)

Last month We Built A Profitable Shopify Store From The Groud Up.

If you’re new to FSO we build businesses from scratch every 30 days…

The Bizathon Challenge!

Last month was a huge success, not just for our team, but for many.

Because of this, we’re continuing with Shopify as the focus for Bizathon4.

This month we’ll scale our Shopify income by utilizing pro-level tactics.

Watch the video to avoid running into a common PayPal trap:

Today we’d like to discuss something serious with you.

You’ve likely seen many videos and posts online talking about how to make it big online with Dropshipping.

They almost never bring up the downside of the business.

Especially when it comes to PayPal.

I want to share what recently happened to Rito.

Be vary wary when doing business with PayPal. 

Especially if you’re a drop-shipper.

Avoid PayPal Dropshipping Issues

It all started about a month ago.

If you’ve been drop-shipping for a while, you’ve likely encountered this.

Otherwise it may happen in a month or a couple months…

And there is a 99% chance it WILL happen to you.

No payment provider is particularly thrilled about the drop-shipping model.

Especially not PayPal. In fact it’s considered “High Risk” by the company.

Since Rito’s drop-shipping business revolves around AliExpress, many promote the same products.

Unfortunately within the internet marketing space there are an absurd number of thieves, liars, and scammers tarnishing the good reputation of those subscribing to ethical business practices.

Before going any further let me say this…

If you’re doing more than $1,000 dollars per week in transactions, I invite you to use Stripe. 

Their dispute resolution and customer service is second to none.

If this is not possible because of the country you reside, you must make do.

Just know once you’re doing high volume, you will have account reviews and a reserve applied.

An account reserves takes and holds a percentage of every sale for 30 days as an insurance policy.

Lately our FSO associated Facebook pages have been receiving messages from people pretending to be our customers as well as real customers who were duped into believing they purchased from us.

After searching names, phone numbers, email and transaction numbers, 9 out of 10 times, they didn’t purchase from us. 

None the less, our account has been frozen 3 times in the last month.

PayPal Account On Hold

CommonPanda has shipped more than 500 products since launching.

All the while using PayPal as the primary payment processor. 

During that time (about 1.5 months) our account was put on hold three times.

Two were related to disputes being opened due to products not being received.

And the other was for a damaged product being shipped.

With the disputes over products not being received, all we had to do was provide PayPal the tracking numbers.

This proved the items were in transit the disputes were immediately resolved. 

The third time our account was placed on hold was due to a customer receiving a defective product.

We refunded the money, told the customer to keep or discard the product and sent another one for free.

The customer was stoked and we saved face. 

The problem was PayPal didn’t remove the hold from out account this time. 

Instead they escalated the situation by freezing the account and preventing transfers until a Review was completed.

To be fair we could still process orders during this time. We just weren’t able to make any withdrawals.

The next part is a headache but by no means the end of the world.

Most PayPal account reviews are resolved within 72 hours. 

Getting A PayPal Review

Rito PayPal Review Document

As part of PayPal’s commitment to provide the best experience for buyers and sellers. We perform routine reviews of merchant accounts.

This was the message emailed to Rito, which accompanied a list of demands to be met before restoring account standing.

Here’s what they needed to ensure we were legit:

  • Tracking information for a handful of random transactions
  • Estimation of monthly sales volume for next 6 months
  • Written statement detailing our refund policy
  • Resolution of any existing buyer complaints
  • Explanation of increased payment volume
  • Any details about inventory management
  • Copies of original bills of sale
  • Contact info for suppliers

Be Honest & Transparent With PayPal

Don’t try to hide anything. 

Be as helpful and forthcoming as possible regarding how you run your business.

If they sense you’re hiding something it will not end well.

Be sure to provide everything they ask for within the email. Take your time and make sure you’re thorough.

Send screenshots and links where applicable.

Include your company logo on the document you send to convey professionalism. 

If you haven’t been shipping products, you won’t be able to provide tracking numbers so your account will be shutdown and any funds seized.

I know the #RitoTribe doesn’t get down like that, but it should still be said.

When your account get’s reviewed don’t freak out.

Calmly address the situation like a true boss and it will be resolved.

Any business has ups and downs – this will always be the case.

Take your lumps and keep moving forward.

That’ll do it for Episode 12 – Great work!

Questions, comments or just want to say hi?

We love hearing from you in the comments section below!

Success by choice, not by chance,

-David Aston


If you’re not kept in the loop via our #Bizathon definitely sign up today.

P.P.S. Click here for Episode 13!


  1. Craig June 23, 2018
  2. Dmitry June 24, 2018
  3. Aniruddha September 6, 2018
  4. Dharmesh Hadiyal December 23, 2018
    • Ritoban Chakrabarti March 12, 2019
  5. oussama March 13, 2019

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