In these cases, has anyone had luck getting their money back via either arbitration or small-claims court?
I am sure their user agreement gives them some leeway to hold the funds for some period of time, but I would be surprised if the law allows them to permanently keep the money, with no legal recourse.
The email I got said my funds would be held for 180 days after which they may be released at PayPals discretion. I am guessing their discretion almost never releases the funds. Thankfully I had no funds in PayPal since I had always heard the warnings.
I am sure their user agreement gives them some leeway to hold the funds for some period of time, but I would be surprised if the law allows them to permanently keep the money, with no legal recourse.