Under U.S. federal law, PayPal is not a bank [1]. This is important. From the government's perspective, you give PayPal money and then PayPal gives you money. Between those events, it's not your money. PayPal has enormous discretion around what they can do with those funds, how and under what circumstances they get to decide to give it to you and if they get to keep it forever.
What state do you live in? Do you do business through an entity, e.g. an LLC? If so, where is it registered?
PayPal is, varyingly, registered as some form of a money transmitter in many states [2]. While your federal protections are probably limited to antifraud, protections you're probably outside of (PayPal has good lawyers--you agreed to surrender lots of privileges when you opened an account), there may be state regulations you can use to, if not force action, encourage it.
Going forward, I tend to consider any business using PayPal for mission critical processes as being negligent with important risks. If you can't avoid using PayPal for certain lines of business, set up a nightly sweep from PayPal to a proper bank account.
[1] http://www.zdnet.com/article/fdic-decides-paypals-no-bank/
[2] http://law.bepress.com/cgi/viewcontent.cgi?article=1153&cont...
Disclaimer: I am not a lawyer. Only a lawyer can give you good legal advice. Don't take legal advice from Internet comments.
What state do you live in? Do you do business through an entity, e.g. an LLC? If so, where is it registered?
PayPal is, varyingly, registered as some form of a money transmitter in many states [2]. While your federal protections are probably limited to antifraud, protections you're probably outside of (PayPal has good lawyers--you agreed to surrender lots of privileges when you opened an account), there may be state regulations you can use to, if not force action, encourage it.
Going forward, I tend to consider any business using PayPal for mission critical processes as being negligent with important risks. If you can't avoid using PayPal for certain lines of business, set up a nightly sweep from PayPal to a proper bank account.
[1] http://www.zdnet.com/article/fdic-decides-paypals-no-bank/
[2] http://law.bepress.com/cgi/viewcontent.cgi?article=1153&cont...
Disclaimer: I am not a lawyer. Only a lawyer can give you good legal advice. Don't take legal advice from Internet comments.