

After The Regretsy and Diaspora Account Freezes, We’ve Lost Confidence In PayPal - dolphenstein
http://techcrunch.com/2011/12/06/paypal-account-freeze/

======
acabal
I haven't trusted Paypal for a long time, since they repeatedly froze my
account just for accessing it from a foreign IP. That wouldn't be so bad,
except for their demands of things like faxes of utility bills and bank
account statements just to get it unfrozen. Ridiculous.

I recently had to receive a significant payment from a client of mine. It
would have been convenient--and worth the fees--for me to use Paypal to
receive that money. But after all the stories of frozen accounts and my own
experiences, I'm scared to use Paypal for more than a few hundred dollars. I
had the client send a check instead.

~~~
DeusExMachina
I had the same experience, but even more ridiculous. When I was trying to fill
the form for the verification, I always had an error on the page that said
"please try again later". I tried to get in touch with support, and at all my
emails they were replying with the same copy and paste with the steps, which I
could not follow. I tried to get someone on the phone, with no luck. After
weeks I gave up, because the money on the account were not worth the hassle
(they were around 300€).

But I will never use PayPal again, that's for sure.

~~~
quantumhobbit
I wonder how much Paypal has stolen from their former customers this way over
the years. It might even account for a sizable portion of their total revenue.

~~~
funkymatt
Do you really think they will count money they steal as part of their revenue?
I'd be willing to bet it goes straight into some sort of bonus pool.

~~~
semanticist
It will be held in non-interest generating accounts until it can be released.
Srsly, this is financial services and there's the odd regulation or two that
everyone - including PayPal - have to follow.

They can't 'steal' the money - when accounts are locked they either hold onto
it for six months or require you to keep a minimum balance. This is how they
mitigate their massive risk profile.

Their customer services are entirely worthless, it's true, but I suspect that
anyone coming to 'disrupt' PayPal will struggle with many of the same issues
because they're caused by fundamental risk issues with online payments.

------
JoshTriplett
The fundamental problem here: PayPal doesn't really care about how merchants
feel about it. PayPal cares about making people who spend money really happy,
and they succeed at that. They have a huge captive audience with eBay, which
_requires_ the use of PayPal. They have thus created a huge base of clients
who want to spend money using PayPal, because they find it convenient, because
in many cases because it doesn't require a credit card, and because the
customers know that they can always complain to PayPal and PayPal will make
them happy.

Thus, PayPal doesn't particularly care if merchants despise them, because the
merchants have little choice; you can't easily convince people to use a new
service, and on eBay you have no choice at all. PayPal will quickly provide a
refund to customers because PayPal want to keep customers happy, and because
they know merchants will eat a refund now and then. And PayPal doesn't
particularly care about understanding merchants who don't ship physical
objects to customers in boxes, because they don't want to think too hard about
that case when it doesn't matter to most of their customers; they'd rather err
on the side of "you haven't shipped a product, so we'll issue a refund".

No amount of bad PR among people like us, who actually care about merchant
woes, will overcome the incredibly positive impression PayPal makes on people
who spend money.

------
iamandrus
I lost trust in PayPal a LONG time ago.

Once upon a time, I was ordering a shiny new processor from eBay. The
processor was located in Italy and the seller was Italian (obviously). I think
nothing of what PayPal would do and send the money. Mere hours later: "Your
account has been frozen." They wanted my utility bill, SSN card, drivers'
license, and a copy of my birth certificate (I still live with my parents
because I'm in high school, so my name wasn't even on the utility bill). To
pay for one fucking $200 processor.

Luckily, I contacted the seller and we did the transaction through Escrow. He
was pretty understanding of it and claimed that his account had been suspended
numerous times. He used the exact words "piece of shit scammers" to describe
PayPal.

WePay all the way. Someone needs to start a rival auction site that uses these
other payment services. I'd use that nonstop as I have a ton of stuff to sell
but my eBay account is banned (and my name is blacklisted from both PayPal and
eBay, hilariously).

~~~
rmc
_WePay all the way._

Good point, with WePay you wouldn't have this problem. No Italians would be
able to take your money [https://www.wepay.com/Does-WePay-allow-international-
non-US-...](https://www.wepay.com/Does-WePay-allow-international-non-US-
payments)

------
zachinglis
Well done TechCrunch for finally jumping on the bandwagon.

The first line about people no longer trusting Paypal. People haven't trusted
Paypal for many years, but used them anyway.

~~~
bproper
Why is it praise-worthy to jump the band wagon?

~~~
goodweeds
Techcrunch jumped the shark a long time ago. I'm assuming a band wagon is much
larger than a shark, so it seems like the extra effort deserves some praise?

------
rickmb
Paypal is the shadiest of mainstream internet companies. You're better of
doing business with organized crime.

The whole business of freezing legit accounts and consequently stonewalling
the owners, _often for months_ has all the hallmarks of a scam.

I would not be surprised to see Paypal execs end up in jail.

~~~
goodweeds
_I would not be surprised to see Paypal execs end up in jail._

I would be incredibly surprised to see bankers/paypal execs go to jail. It
would almost restore faith in our system. The only bankers I've heard about
going to jail in my life were a handful of scapegoats involved with the SNL
scandal, a couple of "rogue traders", and Bernie Madoff.

To quote Anti-Heros, "Don't pass go. Don't post bail. Rich people don't go to
jail."

~~~
muro
[http://en.wikipedia.org/wiki/Martha_Stewart#Stock_trading_ca...](http://en.wikipedia.org/wiki/Martha_Stewart#Stock_trading_case_and_conviction)

~~~
marshray
Right. Not a banker -> went to jail.

------
nextparadigms
Google could've really capitalized on this now if they didn't sit on their
asses for _years_ with Google Checkout. They will probably focus more on it
now that they've renamed it to Google Wallet and they need it for Android, but
it will take a while before it can even touch Paypal.

~~~
praptak
I don't believe Google could do it right. Nope, not with their track record of
(automatically) blocking ad publishers' accounts and later stonewalling said
publishers. All in the name of click fraud prevention, of course.

I think they realize this and it might be the reason they drag their feet on
Google Checkout.

------
goodweeds
It really took you this long to lose confidence in PayPal? The Regretsy &
Diaspora account freezes are just the tip of an iceberg of consumer abuse
whose girth spans over a decade now. The real question is this: Why is it that
all consumer banks become incredibly anti-consumer once they reach a certain
scale? Paypal's business practices are no less abusive and invasive from that
of Chase, Wells Fargo or Bank Of America.

------
chrislomax
A friend of mine recently had some money stolen from his Paypal account. The
long and short is that someone was sat outside his house connected to his
wireless and were monitoring keystrokes somehow. I don't know the detailed
story as they were telling me over a series of months and I lost track.

Paypal would not release where his money had gone or even how to get it back
and even went as far as suggesting his parents had stolen it from his account
before finally releasing the money back into his account. This went on for
months, it was all over a nominal £200 theft.

~~~
rmc
_connected to his wireless and were monitoring keystrokes somehow_

I highly doubt this story. That sort of technology _per se_ is not possible.

More likely someone used the same password on the email and or paypal account
and it got out.

~~~
safeaim
How is that sort of technology not possible? Is it not possible to connect to
a secured wireless network with enough effort, and then maybe perform a MITM
attack? Maybe the user used the same password on sites not protected with SSL.
Or the hacker maybe manipulated traffic at router-level etc. A far fetched
scenario indeed, but not impossible.

However I do agree with you that the most likely scenario was him being
phished or exposed to a trojan.

~~~
rmc
All this effort to steal money from someone who (I think) lives with their
parents?!

A lot of the things you say "far fetched, but not impossible"/"enough effort"
are misleading. These things are about as likely as winning the lottery
several weeks in a row. Possible. But be realistic.

What is realistic and happens a lot is (a) bad computers security (b) password
reuse (c) simple passwords ("password1" and friends) (d) one site someone gets
hacked and people know that password (e) some malware on the machine. These
things are much more likely than someone sitting outside their house.

~~~
safeaim
Haha, how is my statement of it being far fetched misleading? The scenario is
far fetched, but possible, didn't say it was likely. The only reason I replied
to your comment was that you said "That sort of technology per se is not
possible.".

That's not only misleading, but also wrong.

------
v21
But that Paypal does this shit has been a hardy perennial new story for years
now. Competitors are coming, slowly, from different directions, but it's not
clear that Paypal is actually much damaged by these stories.

~~~
danilocampos
Blockbuster wasn't _damaged_ by all the ill-will they created by charging
absurd, usurious late fees. They were the king of their realm, as PayPal is
now.

But, making your customers loathe you turns out to be a bad idea in the long
term. The very _moment_ reasonable alternatives present themselves, those
customers are gone for good.

PayPal has done a lot of legwork, especially for international commerce. But
this legwork can and will be done again one day – or, someone will discover an
interesting workaround that makes this legwork unnecessary for some specific
but perhaps very common cases. Human ingenuity is inevitable, especially with
such rich rewards waiting.

Either way, PayPal won't enjoy its position forever. Unless they turn these
perceptions around, it'll be hard fall.

~~~
wmf
Hasn't PayPal been screwing people for ten years? I suspect there's some
reason why no better competitor exists.

~~~
code_duck
Paypal was the first to rise to the top, and has since benefited from the
network effect. It's only been about 5 years since the average American
started to be comfortable buying products online.

~~~
dangrossman
There _were_ real competitors when PayPal was a younger company, but a lot of
them went out of business because they didn't solve the fraud problem. It
wasn't just a matter of adoption. PayPal hemorrhaged millions to fraud before
they created the technical and people systems to make it manageable.

~~~
hfz
Anyone interested with the fraud problem story can read more in Jessica
Livingstone's book, Founders at Work.

------
jrabone
People are complaining about PayPal "hiding behind antifraud", but real banks
do this too - at least in the UK. My bank has phoned me up multiple times to
check transactions. On one occasion they simply "black-holed" a credit card
transaction and didn't bother to tell me, nor did the merchant contact me. On
another, they made a simple purchase take 45 minutes of phone-tag because
buying a bed is an "unusual" purchase. Well, DUH. Moving house is pretty
fucking unusual, too.

I now try to remember to phone them before buying computer bits or large
"unusual" purchases, but that has a 50% chance of a dropped call as they try
to transfer my request.

So, no, PayPal aren't really any different to any other payment processor in
my experience.

------
stuartk
One solution I rarely see mentioned in these discussions is Amazon payments.
Does anyone use them?

~~~
chalst
Kickstarter uses them for donations:

<http://www.kickstarter.com/blog/amazon-payments-and-us-only>

------
westiseast
yep, Paypal is awful. They hide behind 'fraud protection' as an excuse for
absolutely awful and opaque customer services, yet... how many people here
have had their bank account hacked/defrauded? And, at least for me, I can
usually get my bank on the phone and most problems resolved within 5 minutes
(and that's living in China dealing with a UK bank account).

I have a business account with my bank and I'm a valued customer and they
offer me extra services and discounts. Yet with Paypal, if you run a business
through them, you're almost automatically treated like a hassle, a criminal, a
'suspect'.

~~~
patio11
As a counterpoint, when Paypal detected suspicious activity on my account
("Egads, someone just accessed your account from a novel IP in Japan and then
received a payment of about a month of your normal turnover and then spent it
really really quickly!!1"), it took a one-minute phone call to resolve. ("Hiya
Paypal, it's me. _does recognition dance_ I just moved apartments." "Oh, OK.
We just wanted to make sure no hanky panky was happening. I've unlimited the
account for you.")

~~~
westiseast
Wow! That is positive. So far I've had really poor customer service from them,
and not once spoken to a real person. I've never had the account frozen, just
payments reversed and no explanation.

------
dasil003
Wishful thinking. PayPal simply does not give a fuck what noise the silicon
valley crowd makes. The startups that choose not to do business with PayPal
are a drop in the bucket.

------
jscore
"Hey PayPal, do you realize people no longer trust you?"

The truth is they couldn't care less; they're a preferred point for
e-transactions on eBay and elsewhere.

It's back when you wanted an iPhone but hated AT&T, they knew you couldn't get
an iPhone with another provider, so they didn't give two shits about their
crappy service and customer care.

------
click170
PayPal lost my trust and my business a long time ago, this is just further
demonstration of why.

------
SoftwareMaven
So what is the alternative for subscription-based software services? Is WePay
a viable option here? I'm currently in the market, and, while not afraid of
PayPal, I'm not fully enamored of them, either.

~~~
patio11
If I were picking new for today, I'd use Stripe + Spreedly if I were a US
developer. (I've used both separately.)

That said, I have no major complaints with Paypal. (Nor do most merchants who
use the service. You just don't read blog posts like "Day 1,349: Paypal
continues to provide very cheap services without requiring a merchant account.
Details pretty much same as Day 1,348."

~~~
alapshah
Why not Samurai? I looked at both stripe and samurai in conjunction w/
Spreedly and came out on the Samurai end (lower prices being the motivating
factor)

------
JulianMiller520
I was done with them as soon as I read about the passing of Ilya Zhitomirskiy
because I can't imagine the additional stresses put upon him because of how
Paypal treated Diaspora. I stopped using them years ago but we need to
organize a massive snub of the service until they revise their policies, make
them fully transparent and stop constantly screwing people. Remember that we,
as a country, were able to get the banks to scrap the $5 debit card fee. What
are we waiting for with Paypal?

------
paulhauggis
It seems like everyone wants less security precautions. If a new company does
just this and your account gets hacked, are you going to blame the service
provider or expect them to take the hit for your lost money?

Paypal does need to make some changes, but many of the people that get their
accounts frozen are either transferring lots of money in a short amount of
time or are running suspicious businesses (even though they may not be illegal
or even unethical).

~~~
epistasis
>It seems like everyone wants less security precautions.

People want better customer service, not less security precautions. (Who would
want less security precautions with their money? Is this just a really
argumentative way to push a position?)

------
samdelagarza
I've seen this happen time and time again. And working with their security
department is difficult. They need a strong competitor.

------
dangrossman
The article implies there have been problems with _withdrawing_ your own
money. I've _never_ seen that come up in any of the stories over the years.
Has anyone experienced that issue?

I never withdraw less than $5000 at a time...

~~~
lkrubner
I am not clear on what you mean. Most of the time when a PayPal account is
frozen, you can not get any money out. My PayPal account was frozen for almost
2 months, back in 2002. I had about $1,200 in the account, and I could not get
at any of it. It was a painful episode for me, as I was broke and had been
planning to use some of the money to pay my rent. PayPal asked for a lot of
documentation from me. They wanted me to prove my address, but as I rented and
moved around a lot, it was difficult to do so. I had to get a friend to put me
on the electricity bill over at their house (the friend's house) so I could
get some paper documentation that PayPal would accept. They hung onto my money
for a long time.

~~~
dangrossman
The TechCrunch article warns that withdrawing too much money from your account
can trigger having the account frozen, and recommends withdrawing less at a
time. That's what I've not heard of before.

Of course once it's frozen you can't get at the money, that's the whole point
of locking down the account. I've experienced it myself, but not with PayPal
-- I had over $13,000 held for 6 months.

~~~
mnutt
I don't have any experience withdrawing money from paypal, but perhaps there
is a way to make small automated withdrawals constantly? Though who knows,
they may flag that behavior as fraudulent as well.

------
klon
So do PayPal have a competitor that works internationally like they do?

~~~
muyuu
Moneybookers, payoneer.

EDIT:also, Wepay.

~~~
klon
> However, only US-based customers can use WePay to accept payments.

~~~
muyuu
I just found a reference shortly after mentioning Moneybookers and Payoneer, I
have never used Wepay. Actually, I have only used Moneybookers (soon to be
renamed "Skrill"). I'm based in Europe myself.

Could also be worth noting that bitcoin is a real possibility, some business
do it without any issues (except higher-than-normal volatility, but if you
exchange your bitcoins quickly this won't ever be a problem).

------
breakyerself
Took you long enough.

------
showdog
"Startups are gunning" for PayPal? Since when? No one else has gone beyond the
US. No one is creating any alternatives for international ecommerce. And how
many years has it been that PayPal has had complete domination?

Is it that hard for startups to provide international support?

Until there is a viable alternative, most of the world will be compelled to
use PayPal.

