[jacquesm]

This is actually the one thing that makes some sense in their fraud policies. It goes like this: if a business is growing then chargebacks that roll in later will roll in against a larger volume of transactions, so the merchant will be most likely flush enough to be able to pay the fees and roll back the charges. If there is a steady state then as long as things don't get into very high risk territory it should all still work.

But if a business shrinks then suddenly PayPal itself becomes exposed: the volume in sales could drop faster than the liability from recent sales that are still in the chargeback window reduces and at some point there may be the possibility that PayPal will have to cover chargebacks for the newly defunct merchant. To guard against this possibility any rapid drop in charge volume will result in an increase in the hold back time.

So while understandably very annoying it does make some sense.

(I can't believe I've found a reason to stand up for PayPal for once and I hate them with a passion but this is simply the way any party that uses a shared merchant account will deal with the problem, if you don't want to have this you'll have to bring your own merchant account along and then things will be a little bit easier, but VISA, MC and AMEX all have similar rules on their books).