If this is true, shouldn't Paypal give you the option to receive your $20,000 back and then quit using Paypal? Or perhaps be a bit more explicit with this up front (_before_ they froze your account)?
Unfortunately, it's too late by that point. Paypal have taken on the risk, if they just let you get your money and leave, then that's what all the fraudsters would do.
In the US, if the merchant doesn't pay, or is fraudulent then Paypal would have full liability. Same situation with Stripe.
From the perspective of a Paypal or Stripe, letting someone accepting credit cards is very similar to extending someone a loan. In the early days of Paypal, fraud almost killed them several times. I've been involved in a smaller credit card processing business and fraud almost killed us a few times.
In the current system in the US, legit merchants ends up getting beat up the most, and taking the most liability, in exchange for the convenience of accepting plastic.
If someone uses a stolen credit card to purchase goods online or in person, it's their, and they have to pay. And often lose the items sold too.
If the Paypals can't pay, then the upstream banks have to pay. Of course this would never happen, so the upstream banks never have to pay. Their risk is totally covered along the chain; so they don't really care THAT much about fraud.
Meanwhile, the end users of credit cards enjoy pretty good liability protection, and get paid in miles and cash rewards. So, they're fat and happy.
I have a friend who ran a computer store. He accepted credit cards and sold used Windows 7 Pro PCs for $150USD.
Some of the customers bought a PC and then did a chargeback on their credit card to get it for free. Enough of them did that so that he got blacklisted by his bank and his credit card machine no longer worked.
People do the same thing with Paypal when I sell something on eBay. Even if it is the right item, they do an item not as described to get their money back. For example I sold a used Macbook that was an older model and could only run 10.7 and buyer knew it was used and old and could only run 10.7 but filed an item not as described claiming it was old so he wanted half off. Macbook was worth $500 and he bought it for $350. I told him Macbooks keep their value unlike PC Laptops. Paypal froze my funds and eBay investigated. Eventually eBay sided with me because the listing said old and used and limited to 10.7 etc. It took like two weeks of freezing my account until they resolved it. It was not even my fault, the buyer wanted half off for no good reason and item was as described. He could have sold the Macbook for $500 and made a profit.
From my experience I'd be surprised if a legitimate business that had proper checks for fraud and delivered their service as advertised ended up getting a high enough rate of charge backs to lose their account.
I used to run a computer store. Did not take credit cards as we couldn't afford the service. Got hit with a lot of bad checks. People take advantage of small businesses in that way. We couldn't afford a fraud scanning service or credit check in 1995-1997 and went out of business as a result.
My friend with the computer store that took credit cards, the card scanner was supposed to check if the card was used in fraud and all of that. He got hit by people using the chargeback to get free computers so many times that he got black listed. Getting the checks for fraud is hard as one can do a chargeback multiple times and it doesn't count as fraud.
