WTF? Are they now suggesting that all business accounts must have “government approval” in advance, or is this just the first line of (procto)logical(ly extricated) response they came up with when called on their BS?
According to the update on your link, PayPal has now backed down and the restriction was lifted. I like to think your post was the cause of their backtracking.
I have heard of book sellers getting their accounts frozen and even fined $500, reason? The anti-pornography clause, and they were applying it to art books or written material. It was apparently someone reporting their store to paypal to be a nuisance.
Basically of you are small fry Paypal will find a clause to shut you down, do you sell a licit item that can be considered drug paraphernalia? The reasons they can freeze your account are lengthy, read the contract and either be big enough or fly under the radar.
Paypal is scum. I really wish that there was a middle ground between censor-happy puritans like Paypal and the utter mediocrity of Bitcoin - a Swiss bank account for the internet, which was happy with their 3% cut instead of also wanting to use their position to cleanse the internet of undesirables.