PayPal Square terminated my account - Dispute Resolution

I'm in a difficult situation and trying to figure out my next steps.

Square terminated my account. I've been dealing with this for about 12 months now and the situation isn't improving.

The amount being held/disputed is approximately $5,814. I have tried contacting customer support 6 times with no resolution.

Do I have a strong case? What should my next steps be?

This is frustratingly common for legitimate massage therapists, CBD sellers, firearms dealers, and other lawful businesses that get caught in payment processors' broad risk categories. The processors use MCC (Merchant Category Code) based screening that flags entire industries fwiw.

Options:

1. Appeal with documentation: Send your state license, business license, and proof of legitimate operation. Request manual review. Sometimes a human override fixes the automated screening.
2. High-risk payment processor: Processors like Square and PayPal have very conservative risk policies. Consider switching to a processor that specializes in or explicitly accepts your industry (PaymentCloud, Dharma Merchant Services (at least in my experience), etc.).
3. Legal angle: If Square is holding funds, the same money transmitter law arguments apply as with Stripe. For the termination itself, you have fewer options — their TOS gives broad discretion. But some states' consumer protection laws may apply if the termination was based on a factual error.

For your funds: demand release in writing, cite your clean chargeback history, and set a specific deadline. Escalate to state financial regulator if they don't comply.

The key with frozen funds is to provide exactly what they ask for and nothing more. Over-explaining or providing unsolicited documents can actually delay the review process.