PayPal - Ebay collusion, unethical if not illegal Internet

I recently used eBay for the first time to sell a couple of items. Not knowing the affiliation of the companies, I found it a bit odd that eBay was basically forcing PayPal on me as my method of receiving payment.

PayPal seemed like the best way to receive funds. Further, from statements and implications made on eBay, it seemed as though my products were not likely to sell unless I used PayPal.

So I signed up for my PayPal account and listed my items. The items sold for my asking price. I get a message from PayPal (or eBay, not sure which) stating "payment received, please ship item."

Well, come to find out, PayPal put a 21 day "hold" on my funds. I wasn't (and still am not) all that upset about this, as the hold could be released three days after verification that the item was received by the buyer. And, as this was my first transaction, I only thought it fair that they take steps to ensure I'm not a scam seller.

However, after noticing the connections between eBay and PayPal, brief research showed that PayPal is owned by eBay.

Now, call me crazy, but isn't this a bit like Wal-Mart owning American Express, and then basically requiring that you use an AmEx card when shopping there?

Well, actually, it's worse. AmEx is a financial institution and thus subject to regulations in place to protect consumers. PayPal is not a financial institution, it is a self-described "agent for payment." Aside from standard consumer law, there are no regulatory safeguards to protect the consumer from any action that PayPal may wish to take.

So, aside from the risk of losing consumers, it is always in PayPal's best interest to hold funds as long as possible. Interest is earned on those funds that are in your account but not at your disposal, and that interest is not being passed on to you. And while the interest earned on my $200 for three weeks is surely miniscule, the profits from dubious "holds" must be staggering.

Beyond all of that, eBay has a great deal, if not total control over if and when PayPal will release your funds. Horror stories abound of sellers who ship their product, only to have the buyer complain to eBay that it was never received. eBay tells PayPal to refund the money to the Buyer, who now has the money and the product. The seller is left with little or no recourse. And, of course, it can go the other way.

To reiterate, my personal experience, although a little aggravating, was not all that bad. But it seems that this collusion offfers a BIG chance for these companies to screw over the consumers. I would advise anyone who encounters any major problems to report your claims to the FTC and your state's attorney general.

Best regards, and I'd love to hear other's thoughts on this.