Is this Paypal experience customary?

You're not agitated by being called a liar, nor being implicitly accused of fraud?

It sounds like PayPal, or someone, made a mistake that PayPal then processed a fix on. When the guy called to say someone took money from his account with no notification, "what happened?", they said _he_ had actioned the refunding of the money. Which he hadn't.

They lied, purposefully and deliberately. But there's a good chance that the person on the phone wasn't lying IMO, instead someone altered his account in a way that didn't show [to their phone reps] in their system ... which is IMO much more messed up.

So PayPal lied to him.

Then they asked for details of the transaction that they said he had refunded and "blocked" his account for not providing them.

Government financial services should impose heavy fines on things like this, not informing a creditor when debits are made on their accounts. His PayPal account should have a user traceable error (with doubled entries in the other relevant account entries) -

    money paid from $ACCNUM with $ACCID
    money paid due to PayPal error and refunded to $ACCNUM

I mean come on, is basic accounting beyond them?

If they could do accounting properly then they wouldn't have to implictly accuse him of fraud (demanding the transaction details).

My experience of PayPal has in general been pretty good, but I did have a person pay for something from eBay, then when I was sending it - like just about to head to the post office I realised I'd not checked the payment. On checking the transaction link in eBay the transaction didn't appear on PayPal .. uh oh, so I checked PayPal and I couldn't find a transaction for the amount in my account list. So I checked eBay and the buyer had asked to cancel the completed transaction ... so I said yes, very begrudgingly. Then a few days later the buyer asked for the money back, but I never had it, and they (assuming they weren't lying) had a transaction for paying me ... which should be impossible with proper accounting because that transaction should include an entry in my account ledger too his payment and my receipt are one transaction.

My suspicion is that their database processing is lacking and their account ledgers as displayed to users don't properly demonstrate the status of accounts.

There's basically a 0% chance that it is because they don't hash passwords and they're a limit on a table column or something. Paypal has faults, but they're not that incompetent. The more charitable logic for this policy goes like this:

1) for those who want security, 20 digits of random characters using a password manager is plenty

2) for those who actually remember and type a password (i.e., just a regular password), requiring them to keep it less than 20 characters increases the odds that they can actually type it in correctly (think elderly or more easily confused people here) and that reduces calls to customer service to complain that their password doesn't work.

Reason #442 to use a password manager.

This is a very likely answer. Strange that it is downvoted.

You'd think paypal was run by two people in someone's basement ...

I've been using PP for several years without a single incident. I use it because I don't have to write Code or maintain a server to process payments. My business uses a passive web page. My online order form is written in plain HTML, in a text editor, and I was able to fully test it in a few minutes.

I keep my eye out for alternative services because like many others, I've heard horror stories, and would not mind having a backup. So far I haven't found anything.

A possible reason for my good luck is that I run an "analog" business. My product is a physical good that I make and ship, so the customer gets something tangible and that's the end of it.

I don't want to cast aspersions, but the horror stories I've read are either one-time incidents with eBay sellers, or complex digital services where the product is an intangible.