That is the problem

PayPal is not a bank, which is why they can royally screw you by locking your account and you can't do anything about it.

A bank has the obligation of letting you have your money. If the bank suspects fraud, they cannot do anything without alerting the police first (granted, the procedure can be quick, but still, it's not one-sided).

If push gets to shove, with a bank you can always go to your nearest local branch and have a face-to-face discussion with someone who will actually be able to sort things out.

From what I hear about PayPal, not only is there no one to see in person, but PayPal can just ignore you if it feels like it.

Meanwhile, PayPal is getting interest on your money.

I know that Ebay and PayPal work fine for many people, and I'm happy for them. I'm just not willing to risk my money like that.

And another $170m to deal with all the new false positives?

PayPal Europe, at least, already have a fraud detection system. The problems seem to arise when they wrongly accuse. You’re expected to jump through all these hoops. Copy of passport and utility bills. Possibly an oath offering your soul to PayPal, signed in blood. All things that, while unpleasant, are manageable.

Then, there may be something you can’t do. You may have put an unwanted Christmas or birthday present on eBay. You listed it as new, because, well, it was new. Unfortunately, it’s a branded product. You now have to produce a receipt to show that it’s not a fake and came through an authorised distribution channel. What, you can’t do that? You don’t get your money back for 180 days. It may be even longer before your account is unfrozen.

You’ve been sending out your items Royal Mail Recorded. Royal Mail’s delivery is fine. The delivery is very reliable. Unfortunately, the same can’t be said for the Recorded part. The postie may fail to take a signature at delivery, or the record might never make it onto the computerised system. PayPal may insist on proof of delivery. The buyer may say it’s been delivered. Royal Mail may say that, as far as they’re concerned, it’s been delivered. But, if the online Track and Trace system doesn’t agree, once again, you don’t get your money back for 180 days, and who knows when you’ll get your account back.

The staff who handle regular emails and telephone calls either don’t have the training or authority to deviate from the current rigid computerised system. Sticking in an newer, fancier $170m fraud detection system isn’t going to help that. It may even make things worse. Fancier and more expensive makes it harder to doubt its infallibility.

eBay Europe S.à r.l. and PayPal (Europe) S.à r.l. & Cie, S.C.A are not the evil, completely unreasonable companies that some people and websites portray them as. High volume sellers have better contact. A more regular Joe can write to the eBay/PayPal legal department in Ireland, and will probably get their problem fixed. But, most little guys, when given the run-around by front-line staff give up frustrated.