Those of you who know me most likely know I've been a big fan of PayPal for a long time. I've been using them and recommending them for six years now and, for the most part, they've been a wonderful alternative to a costly merchant account.

Today, I have a different story to tell. One which you will certainly want to hear if you use PayPal and plan to continue using them as your business grows.

A couple of months ago, I met a Chinese supplier of designer clothing. He seemed very nice and was looking for people to help him sell his wares on E-Bay. He had a web site to display his stock and he guaranteed $600 per month or more for sales agents. "Ok," I said, "I'll give it a try." I had a friend who was working with him already and making more like $600 per week for what amounted to a couple hours work per day.

I started listing sales. Being the gung ho kind of person I am, I listed many sales. When I sent in my orders, I was shocked to hear, "I don't have these items in stock." OMG! His web site said they were in stock! What to do?! I looked for other suppliers who might have what I needed. It took a little time, but I found some. I quickly sent all the orders and cash I had collected in the hope that these new suppliers would be able to get the merchandise to my customers within the time frame I had promised.

Unfortunately, this was only the beginning of a long list of trials and tribulations associated with my first full scale E-Bay venture. Many orders were delayed for an unreasonably long time in Chinese customs. Another significant chunk of orders were placed with an unscrupulous supplier who took my money, but never sent any products.

As you can imagine, customers were not happy. Every day I had to face 30 or more angry messages from E-Bay buyers who had not received their items. I spent weeks explaining about backorders and customs delays. Then, once I realized I was scammed, I had to explain that to a lot of people, too. Believe it or not, many people were understanding and remarkably patient. Others got angry and submitted PayPal claims against me and that's where the real trouble began.

I remained hopeful that I would be able to cover my losses and satisfy all customers until PayPal limited my account. I understood their reasoning behind it, but the reality was, after fulfilling 90% of over 150 orders, I was suddenly dead in the water with no way to earn more money and pay the remaining dissatisfied customers.

I called PayPal immediately. I explained the entire situation, reminding them that I had been a member in good standing for years and asked for their help. The answer was no. I tried to make them see that their standard policy in this unusual circumstance was actually hurting me, the customers and even PayPal itself. I let them know that I had proven my integrity by fulfilling the overwhelming majority of orders and needed them to lift their limitation (at least partially) in order to fulfill what was left. They wouldn't budge. They insisted I resolve all claims immediately, but left me with no way to earn the money to do that.

I soon learned their claims process did not work as well as expected. It took a very long time for resolved claims to show as resolved and there seemed to be a variety of errors that I would never have expected from a company as large as PayPal. They drained what money I had in my account and even gave refunds to people who received their items! They also stopped payments I made to one reliable supplier who had shipped merchandise long before the account was limited. Basically, they took over control of my business and mismanaged the funds that I had left.

Now, I don't hold myself blameless in this situation. I made the choice to do it in the first place, I dove right in, and I believed suppliers that were less than honest. But, you may be surprised to learn just how many people have gone down the exact same path as me. We've all seen ads looking for E-Bay workers. The suppliers I used (except for the initial supplier who recruited me) all contacted me through E-Bay asking me to sell for them. And, I have since learned that there are thousands of people out there who have had to deal with the same "You're on your own" attitude from PayPal, no matter how earnestly they tried to deal with difficult circumstances beyond their control.

I have since set up a regular merchant account of my own (it's surprising how much easier it is today than it was six years ago!) Now I can accept payments directly without a third party processor like PayPal. I am still talking with many of my dissatisfied customers and have every intention of making things right with every one of them. But, please take this as a warning. PayPal is your friend, but only up to a point. If your sales volume increases significantly, they will start to pay more attention to you. And, if you sell a physical product, be sure to keep extra money in your account just in case you experience difficulties beyond your control.

At this point in my career, I am no longer recommending PayPal because getting a merchant account has become so easy that there really is no need, provided you sell enough every month to cover the fees. Another word of advice, if you decide to try your hand at being an "E-bay Worker" go slow. Get delivery confirmation before selling a massive amount of products for any supplier and don't choose a high priced product ($500 or more) to start with. It may be tempting to earn a higher profit, but suddenly higher sales totals will raise a red flag and PayPal will start paying more suspicious attention to you and your business.