It's an excuse, but it's not payment. Continuation of the contract would presumably require payment. A clients inability to pay ends their right to receive service.

Sure a larger company can usually manage to give grace in such situations (but often won't) but small businesses, as this appears to be, seem to suffer a lot more with cash flow problems.

So the story goes:

1. customer doesn't pay

2. customer and friend argue that not paying shouldn't get their account suspended

3. customers friend tells company to FOAD (or whatever)

4. company terminates all services

5. customer and friend start internet campaign

I'm really struggling to see how the company are supposed to have acted so badly - is it really considered such a crime to not let people have service without rendering payment?

Of course, as ever, there's a lack of detail as to the amounts left unpaid and the nature of the PayPal issue and so none of us should really be offering ludicrously emotional and dramatic judgements about either party.