
PayPal Starts Banning VPN and SmartDNS Services - fernandotakai
https://torrentfreak.com/paypal-starts-banning-vpn-and-smartdns-services-160205/
======
JohnTHaller
If PayPal wants to mitigate risky transactions, give us a good mechanism to
report fraudulent ones. I reverse dozens of donations to my open source
project every month that are obviously fraudulent (testing a stolen credit
card to see if it works). I have no way to report it to Mastercard/VISA or the
cardholder. I have to reverse it or I get hit with a $20 chargeback fee on
that fraudulent $1 donation. And when I reverse it, PayPal keeps their fee, so
that has to come out of our funds.

~~~
Chirael
You might have to institute a minimum donation amount, and link to a page
explaining why. And I honestly don't think it will matter much if the minimum
donation has to be $3 instead of $1 due to fraudulent charges & fees

~~~
eps
Better yet - disable credit card donations and stick to just PayPal accounts.
A set of people who are willing to donate, have a credit card, but not a PP
account is vanishingly small.

~~~
sdenton4
I've had nothing but trouble with PayPal. I give them another shot every year
or three, but invariably have to jump through piles of hoops to make a first
payment, if I'm successful at all. So generally end up using a card directly.
Because PayPal is terrible.

~~~
diskcat
It's the price of operation on the internet. There are more avenues of abuse
and so they have to be very strict. This resulted in a lot of frustrations
from the users, but there is nobody doing better.

------
kintamanimatt
It's an absolute egregious shame that PayPal, after more than a decade of
problematic behavior, is still relevant.

~~~
jdietrich
Until quite recently, they offered the only way of accepting credit cards
without a written application and a substantial security deposit. In many
countries, they're still the only realistic option.

The "problematic behaviour" you describe is invariably related to the fraud
prevention mechanisms required to offer their service. That's the deal -
Paypal are incredibly liberal in opening accounts, but they reserve the right
to freeze an account pending investigation if something looks sketchy.

Paypal still fills a very useful role. I've used their services to receive
payments for over a decade without incident.

~~~
preinheimer
I run a small business in Canada, and a hundred times this. For a long time my
options were: PayPal, or sign a contract with a bank to get a binder with some
instructions to use a horrible API. There may have been some weird options
like e-gold, but nothing I could pitch to a business user. PayPal was easy to
set up, captured credit cards so I didn't need to think about PCI, and did a
non-zero amount of work to block fraud. We've since migrated to start
preferring Stripe over PayPal, but it was Paypal all the way for the first 5
years.

Stripe only launched in Canada late 2012: [https://stripe.com/blog/stripe-in-
canada](https://stripe.com/blog/stripe-in-canada) So did braintree:
[https://www.braintreepayments.com/blog/braintree-in-
europe-a...](https://www.braintreepayments.com/blog/braintree-in-europe-and-
canada/)

And we're america's hat. Many countries are still bereft of options.

(disclosure: I'm now a stripe employee, opinions are my own)

~~~
gcb0
it's not because paypal is better.

paypal is only relevant because they invented the uber-way. They ignore all
legislation. push away. and nobody makes them accountable for anything.

they are pretty much a bank for free

~~~
dangrossman
> They ignore all legislation. They are pretty much a bank for free.

They're more regulated than all but a handful of international banks, and it's
not at all free.

PayPal is a licensed money transmitter in all 50 states, the District of
Columbia, the US Virgin Islands and Puerto Rico. Most of those states have
bond requirements for MTAs, typically six figure deposits. They're subject to
52 different regulatory agencies in the US, in addition to Regulation E
consumer protections and the USA Patriot Act federally. Their
US<->international transfers are overseen by the U.S. Department of the
Treasury’s Office of Foreign Assets Control like any bank. They're not an
ordinary bank in the US only because many years ago a judge ruled that they
don't qualify to be one by the nature of their business; they tried
unsuccessfully to be licensed as one in order to get FDIC insurance on
deposits.

They are a licensed bank in all of the EU, with a bank charter in Luxembourg,
regulated by the Commission de Surveillance du Secteur Financier. In
Australia, they're licensed by the Australian Securities and Investments
Commission as a financial product and by the Australian Prudential Regulation
Authority as a purchased payment facility provider, which is a type of
authorized depository institution (i.e. bank). In most of southeast Asia, they
operate under their subsidiary PayPal Pte. Ltd. which is a licensed stored
value facility regulated by the Monetary Authority of Singapore. They operate
in 203 markets in total, most of which have separate financial regulations and
regulatory bodies PayPal has to comply with.

[https://www.paypal.com/webapps/mpp/licenses](https://www.paypal.com/webapps/mpp/licenses)

~~~
gcb0
exactly, they have the minimum required licenses to not be shut down.

go see how many other licenses and laws you have to comply to open a proper
bank with a branch in any of those states.

------
chimeracoder
Within the last month, I've found that I can no longer access my bank's
website over my VPN, and Netflix has started blocking access while use a VPN
as well.

I can somewhat understand the bank's motivation, but offering two-factor
authentication would be a much better way of boosting security than blocking
VPN traffic.

As for Netflix, it's totally short-sighted. Netflix is _literally unusable_
from my home connection without a VPN (thanks, Time Warner!). Now that they
seem to be consistently blocking my ability to use the service, I'm planning
on canceling.

~~~
dave2000
How can sites tell you are using a VPN?

~~~
necrodome
A list of well-known IPs? The pool is not that large.

~~~
y4mi
couldnt you just provision a server in a random datacenter and create your own
for ~5 $ / month?

~~~
dogma1138
It will be on the same list, if you are filtering VPN's and other
"anonymizers" you usually end up blocking all IP's that are not assigned to
commercial/residential ISP's. IP blocks which belong to data center's, cloud
providers, VPN providers etc. are quite well known and easily identifiable
with a simple lookup.

So you can easily find some no-name VPS provider or get a VPS on
AWS/DigitalOcean/Azure/Racksapce but if the site is actively restricting
access from VPN's/Proxies it won't help you much in most cases.

------
izacus
Huh, I don't get it, why are US corporations so eager to take on them the
tasks that should be done by law enforcement? What does PayPal gain by playing
police and taking on liability for checking the content of transations? What
kind of other petty crime are they going to start policing and can they be
held liable if they fail to?

~~~
auganov
PayPal looses money on fraud (charge-back fraud mostly I assume). They had to
pioneer fraud prediction/detection tech to even survive, let alone be
profitable.

Actually after Peter Thiel left PayPal, he founded Palantir, which is strongly
inspired by their fraud tech. Just more general.

Sure - in an ideal world the law enforcement would just catch all the bad guys
and manage to get the money back. But when that doesn't happen a business has
to account for it.

~~~
Outdoorsman
>Sure - in an ideal world the law enforcement would just catch all the bad
guys and manage to get the money back. But when that doesn't happen a business
has to account for it.<

IMO, the resources aren't there...and it's not complicated...

Cyber crime, fraud, identity theft...the manpower is simply not there to keep
up with it all...sometimes you're lucky if someone has the time to complete a
ticket, or report...

It's very possible conditions could get much, much worse before/if they
improve...

IMHO, at a business level all sorts of decisions are being made that aren't
going to be popular with the public...

~~~
snuxoll
Push instead of pull for card not-present transactions would go a LONG way to
deal with fraud online.

------
mnx
That seems like exactly the use case for bitcoin. It shouldn't have much
impact on the people who actually strongly and immediately need a VPN - they
were probably not using paypal anyway. But it's still a shame they are doing
that, because it will make those services far less accessible to the normal
people.

~~~
vanzard
Yes, perfect use case for Bitcoin! Many VPN providers (and big ones, not small
alternative ones) already accept Bitcoin for this very reason:

[https://www.expressvpn.com/blog/expressvpn-now-accepts-
bitco...](https://www.expressvpn.com/blog/expressvpn-now-accepts-bitcoin/)

[https://www.astrill.com/pricing.php](https://www.astrill.com/pricing.php)

[https://doublehop.me/](https://doublehop.me/)

Etc.

~~~
wheatbin
I purchased a year subscription with PureVPN using bitcoin:
[http://purevpn.com](http://purevpn.com)

------
beambot
It's easy to understand: PayPal is mitigating risky transactions. It makes
sense, is perfectly legal, and frankly... I applaud their continued efforts to
combat fraud and other bad actors.

EDIT: Downvote all you want for disagreeing... but this (fraud and risk
mitigation) is exactly why PayPal "won" the P2P payments space.

~~~
tyingq
>>but this (fraud mitigation) is exactly why PayPal "won" the P2P payments
space

I would argue that Paypal being the default payment method for eBay
transactions might have been a more significant factor in their success.

~~~
beambot
eBay had it's own P2P payment system too. It lost to PayPal, because PayPal
was superior at many things (eg. marketing), but also because they cracked the
fraud problem (which was an existential crisis early on in their history). I
recommend reading the book "PayPal Wars" for a better historical accounting.

~~~
tyingq
True, but that was all very early. The Paypal acquisition happened in 2002.
"Success" in the P2P space in the late 90's/early 2000's was at a much, much,
smaller scale.

~~~
beambot
You said: "...Paypal being the default payment..." I'm saying: They didn't
just get anointed as the default by eBay; they became the default (and
survived this long!) by taking an aggressive stance on fraud and risk.

Also... the scale wasn't as small as you think. According to the numbers [1],
PayPal was doing >$2B in transactions at the time of acquisition. For
perspective, estimates from 2014 [2] put Stripe at $1.5B in transactions (and
a company valuation of $1.75B). Paypal wasn't small, even in 2002.

[1]
[http://www.fraudpractice.com/paypal_companyprofile.html](http://www.fraudpractice.com/paypal_companyprofile.html)

[2] [https://pando.com/2014/01/24/memo-to-stripe-winning-the-
hear...](https://pando.com/2014/01/24/memo-to-stripe-winning-the-hearts-of-
valley-startups-is-not-winning-payments/)

~~~
tyingq
Roughly 60% of that $2B in transactions in 2002 that you are referencing came
from eBay.

------
ppyil
I see this as a responsibility of a vendor and not PayPal. An example is an
online store which only accepts payments from the UK so when I was on holiday
I was unable to use that site. I had to use a VPN to be able to buy the
product and deliver to my house in the UK.

I can understand a website blocking users from other locations or VPN users
but for PayPal to do it seems unnecessary and a way to hurt genuine users.

------
driverdan
Good. The more idiotic restrictions PayPal adds the more likely people will
stop using it. I don't understand why the VPN service accepted PayPal to begin
with.

------
KhalilK
Comparatively, it would be as if they blocked companies which sold knives
because they have a policy against murder.

~~~
jpindar
They do block sales of firearms and some knives.

------
awakeasleep
Here's hoping this doesn't get buried, but this story isn't telling us
anything, and PayPal still allows DNS and VPN services.

UNLESS they're advertised as tools for piracy/circumventing the law.

The services that got banned here were being too cheeky. They weren't
advertising a VPN, they were advertising the facilitation of lawbreaking
behavior.

------
dreamdu5t
Another reason to torrent instead of pay Netflix. Another reason to use
Bitcoin instead of PayPal.

------
petemc_
If you advertise a high value item like an iphone on gumtree, almost
immediately you will get several buyers offering to buy it right away using
paypal. If you're unfortunate enough to accept, they receive item and then
reverse payment.

~~~
awqrre
For local classified ads like craigslist, it is better to do a cash
transaction in a public location.

------
NamPNQ
We can totaly buy VPN via bitcoin

~~~
pavki
Unfortunately, the majority of people don't have Bitcoin acc.

~~~
VMG
Events like these will change that step by step.

------
joesmo
If you use their service, you're subject to their rules. It doesn't matter
that in enforcing their arbitrary rules they're killing your business or even
stealing your assets. Big companies like Paypal and Amazon can do whatever
they want, even break the law, with no repercussions. They can close your
account for legit reasons, bullshit reasons, or no reason at all.

As a business, relying on such companies is one of the biggest risks you take.
Use Paypal? Risk losing access to your funds. Use Amazon? Risk losing access
to your computing resources, shopping platform, etc. You have no recourse if
you anger the big gods of the Internet. Best not to depend on them at all or
the smaller gods that also depend on them. Paypal's not taking payment from
VPNs? Use Bitcoin and cancel that Netflix account. Why pay ten bucks a month
to Netflix so they can pressure Paypal into shutting down legitimate
businesses when you can pay it to a legitimate business (VPN) and watch
whatever you want? Sure, torrenting is probably illegal, but one method shuts
down small businesses and is immoral while the other one hurts no one
("losses" from piracy are not real). You may not agree with this conclusion,
but there is no doubt that this is the direction of thought companies like
Paypal, Netflix, and Amazon are steering their consumers in--on purpose.

------
StanAngeloff
Shame, sooner or later the VPN service I've been using for the past 6 years
will get one of these notices as well [1]. I've been using them to get a
dedicated IP and also tunnel all my public wi-fi traffic. It's legitimate use,
however I can see how over the past years their website has evolved from
business-oriented to be more towards geo-blocking circumvention and targeting
the average Joe.

[1] They have other payment options, too, but all are worse than PayPal.

------
chris_wot
It's not against the law to bypass geoblocking in Australia.

~~~
tptacek
It's not against the law to bypass geoblocking in the US either, and in both
AU and US, you can (and probably have) executed contracts that prohibit you
from doing that regardless of local statutes.

~~~
toomuchtodo
Netflix's ToS reserves the right to terminate your account if you're using a
VPN to access their service.

~~~
chris_wot
They have to prove it.

~~~
toomuchtodo
What proof would you expect them to need other than your login associated with
requests to their website or their content CDNs from IPs associated with VPNs?

Its not a court of law, its terms of service. They can terminate your account
without any recourse. That's how business work (unless you can prove they're
discriminating against you based on a protected class).

~~~
chris_wot
Not necessarily in Australia. It could be considered unconscionable conduct,
which is illegal.

~~~
toomuchtodo
Does Netflix have a presence in Australia? If not, I don't believe its
actionable.

~~~
chris_wot
They do.

------
reviseddamage
I'm surprised they hadn't done that earlier.

While I don't how they can prove that the traffic primarily through those VPNs
were infringing on copyrighted material, it is easier to prove that traffic
through a VPN is attacking Paypal accounts for user or transaction fraud.

------
bunkydoo
Kinda ironic with that whole "new money" superbowl commercial. I'm not sure
money is truly money if you can't dictate how you send and receive it

------
machbio
Paypal is an absolutely worthless organization; the recent tie-up with the
Uber and other companies to directly use their app for payment has resulted in
money being used directly from my bank account over the credit cards that I
have added, there is no way to set default payment method. I really do not how
a big company like that can operate on such shameless policies, too big to
fail has hurt people more than anything else.

------
mirimir
This will be painful for many people seeking privacy and security. But still,
they would be better off if forced to use more private payment methods. For
now, Bitcoin is commonly accepted, and not all that hard to use. And in many
places, online payments can be funded through cash deposits at convenience
stores etc. Such payment methods also reduce fraud exposure for providers.

------
notacoward
I wonder what would happen if those services returned the favor and started
blocking PayPal, which surely deserves it.

------
phiephoo
PayPal isn't competitive on fees, never mind its other issues. Dwolla is a
whole lot cheaper, although USA only. It was designed to bypass card fees.
VPNs should accept cash by mail, too, or at least money orders.

~~~
BillyParadise
If the subject of this policy is a service for people outside the US who want
to pretend they're in the US ( to get Netflix etc), then your point is rather
pointless.

~~~
phiephoo
The last point was cash by mail, which I presume works. FWIW, keep an eye
open, [https://www.dwolla.com/global](https://www.dwolla.com/global)

General complaints about PayPal are landing all over this thread, and Dwolla
answers many quite nicely; you're welcome.

As for the article, I would say: a pox on both houses. I endorse neither EULA
violators nor PayPal as an Internet police force doing online civil
forfeiture.

The way to handle Netflix/PayPal is by international treaty regulation for
nondiscrimination and uniform product quality. Netflix/PayPal is likely in
violation.

Overseas users are in luck: treaty actions will only work OUTSIDE the USA.
Kickstart a trade lawsuit. Any lawyer will work on contingency against deep
pockets. Kickstarter only need fund initial research.

------
theptip
Sounds like they want something like
[https://angel.co/romithq;](https://angel.co/romithq;) PayPal for
"untouchables" in the current payment ecosystem.

------
beedogs
Oh hey, look who the US government leaned on again.

------
ohbleek
Good. They're just making the case for bitcoin.

------
novaleaf
last time I tried using PayPal, it failed my transaction with a non-useful
error message. I disabled my VPN to PrivateInternetAccess and then it went
through.

Pretty annoying that they don't inform users of this guaranteed failure prior
to attempting, but whatever, i already learned not to use PayPal unless
required.

------
mcs_
If it is legal, the problem is not PayPal. Is it?

------
dbg31415
Fuck them.

And fuck Netflix.

And fuck Craigslist.

Anyone who is against privacy needs to just crawl back to the 90s and die.

