
More Paypal nonsense - bradleyjoyce
http://www.regretsy.com/2011/12/05/cats-1-kids-0/
======
danilocampos
I've been sitting here for the last five minutes trying to make a point
eloquently. I'm having a hard time with it. So I'll just put it like this:

What else can we really expect from a product whose parent is _eBay_?

This company is a _fucking fossil_ with all the hunger for customer
satisfaction of a used tissue.

Is it convenient for users? Yeah. Is it worth gambling your entire business
on? Given the lack of accountability these clowns enjoy, I'm going to say
probably not. Neither eBay or PayPal has evolved in any meaningful way in the
last decade. On the contrary: they've steadily declined in user experience and
customer satisfaction. Why trust a business to such a stagnant concern?

On principle, on practicality, for the sake of all of our futures: just say no
to PayPal.

~~~
masklinn
> Why trust a business to such a stagnant concern?

Because there is _no alternative_ and _they fucking know it_.

Oh if you're in the US for the US you might be able (and want) to gamble on an
other younger service, but in the wider world? It's a fucking _wasteland_ ,
it's either Paypal or Big Bank Merchant Account, and those are no fun at all
either.

My card expired (and was renewed) recently, I decided to stop using paypal (so
I did not update the account to the new card), by the third christmas gift I
tried to get I had to re-activate it, because either the gift in question
wasn't available from anybody not using Paypal (etsy merchants, for instance)
or because the CC gateway alternatives to paypal were unusable to plain
broken.

~~~
morsch
I haven't seen the developer side of it, but from the consumer POV in Germany,
it hardly looks like a wasteland. There are a couple of services like
Moneybookers, ClickandBuy, which are very PayPal-like.

There are also a few services circumventing both money "escrow" (not sure if
the term is applicable) and the credit card companies by interfacing directly
with your bank deposits, either directly (using your PIN/TAN, which you have
to give to them, which seems insane) or through cooperation with the banks.

Fewer people over here have credit cards, which has lead to a different
landscape. For many things, simple bank transfers are a viable payment option,
too, as they are typically very fast (with ever shortening legal limits to how
long they may take).

~~~
weavejester
I haven't had a great experience with Moneybookers. I asked a question about
their business account, and in response they shut down personal account
without notice. They eventually changed their mind when I pointed out they'd
violated their own terms of service, but it wasn't handled very well.

~~~
morsch
I didn't like ClickandBuy very much, either. IIRC I used them to pay using
credit card, and when I got a refund from the merchant, of course the money
ended up in the CnB account. I almost forgot about the money and had to pay
some stupid fee to get them to close the account and transfer the money to my
bank account. Not more than a few Euros, but I still felt cheated and more
than that, it was a hassle.

As I said they're similar to PayPal. ;)

------
jdietrich
A little experiment: Apply for a merchant account, saying that you're not a
registered nonprofit, but intend to take donations to buy gifts for kids. I
just phoned my bank and they literally laughed in my face.

People who have customer service nightmares with Paypal are generally doing
something that no other payment processor would touch. I hear complaints from
people who have been accepting pre-orders of a game or pre-registration for a
conference, which is obviously a massive risk for a payment processor. If you
found a merchant account provider willing to take such risky business, they'd
demand a huge deposit and charge well above the odds.

Paypal provide an absolutely exceptional service in allowing pretty much
anyone to accept card payments without a great deal of fuss. The flipside of
this is that they have to deal with risky accounts retroactively, which means
they have little choice but to freeze accounts that set off their fraud
detection algoritms. If you prefer to know where you stand, apply for a
merchant account - in most of the world, that will involve a long, expensive
vetting process.

People continue to use Paypal because for many use cases, there aren't any
better alternatives. This isn't because Paypal or the card companies are
abusing monopoly power, but because payment processing is hard and fraud is
expensive.

------
geuis
At the risk of being perceived as the devil's advocate, let me ask a question.

I've heard of dozens of stories about Paypal along a similar vein. "They
locked my account for unreasonable reason X and now are keeping the money".

Most of these stories seem anecdotal. Can someone point to a rigorously
documented set of cases where both Paypal and the customer's side of things
are reviewed?

Over the last few years, all of these "Paypal screwed me" stories have sounded
like all the complaints a few years ago about Apple seeming to reject apps
arbitrarily. As far as I know, the complaints about Apple from devs have
largely died down since we've had a fairly straight-forward list of do's and
don'ts to work from.

If most of the people reporting problems with Paypal are doing things that are
inconsistent with their policies and then saying publicly how they're being
screwed, then that creates a negative reputation for other people who have
never personally had a problem with Paypal.

~~~
dangrossman
I've yet to see a "PayPal horror story" that didn't fit into one of the "any
payment processor in the world would consider this high risk and temporarily
or permanently freeze the account" slots.

If this discussion with the customer service rep did occur as written, it's
the most ridiculous one I've seen yet, though. It's a major customer service
fail even if the original reason for freezing the account was valid.

~~~
SCdF
Can you explain how the OP's situation is high risk?

~~~
dangrossman
Any change in average processing volume and ticket size is a red flag at any
payment processor. An individual/business suddenly getting a ton of
"donations" is going to look suspicous. An individual/business that hasn't
told their processor their plans, and gets a ton of "donations", is going to
have to convince that processor the donations are really donations and are
going to end up going towards what they said they'd go towards -- because if
they don't, all those donors may charge back the payments, the fundraiser may
disappear, and the processor is on the hook for all the costs.

OP's situation is pretty weird. If that conversation actually occurred, it
wasn't handled well at all, and PayPal may well have done a lot wrong here.
That doesn't mean it wasn't a high risk situation when PayPal initially froze
the account to stop it from getting riskier.

I also think the OP's wrong about losing fees on everything twice even though
the payments were refunded. When you refund something through PayPal, PayPal
refunds its fees to you, even if it was a credit card transaction.

~~~
asto
The problem didn't seem to be that the volume/value of transactions suddenly
went up. The Paypal representative didn't say that at any point in the
conversation.

Even if that _was_ indeed the case, a simple investigation of the issue would
have cleared things up. Businesses are supposed to _work with customers_ , not
fuck them over at the first sign of trouble.

~~~
megablast
I am sorry, how are you privy to the conversation? Or are you just looking at
the bits posted on the blog? There is no way you can draw such a conclusion
form that.

I hate to come down on the side of Paypal, but it would be so easy to abuse
the donation button by doing exactly this, and not sending out any gifts.
There is no way paypal can test this.

~~~
anthonyb
The conversation in the article. Or didn't you read that?

------
kevinalexbrown
PAYPAL: I haven’t seen that PDF. And what you’re doing is not a worthy cause,
it’s charity. ME: What’s the difference? PAYPAL: You can use the donate button
to raise money for a sick cat, but not poor people.

Sigh. At the risk of pedantry, it's hard for my wtf filter to believe this
without more context. Is this a direct quote?

~~~
Zarathust
Yes this is the major point of the exchange to me. It is not really for scam
prevention and it has nothing to do with what is a donation or legal context.
I just don't get the reason why people is not ok.

~~~
skore
I think this one is very simple to understand: Pets don't commit fraud.

Or put differently: If _somebody_ is running a scam here, the "pet" scenario
would mean that it is _you_. The "poor people" scenario would mean that it is
_somebody else_ , making the whole situation a lot more complex. I think this
is simply a matter of internal risk assessment triggers.

------
brianr
These horror stories are so common that I have to ask: why does anyone still
use PayPal?

I ask this in the most constructive way possible... is there a set of use-
cases that PayPal is still the best for? Is it a lack of awareness of
alternatives? International availability? Something else?

~~~
wdewind
Because in reality paypal is actually pretty awesome (note: I work for Etsy
which uses paypal as a payment processor, so I guess I'm kind of biased). The
cost for the business, compared to maintaining your own payments platform at
scale, is pretty reasonable, and the failure rate is pretty miniscule when you
consider the amount of potential fraud that goes through the platform.

Paypal wasn't really designed to handle one off personal payments, it was
designed to let small (and large) businesses accept payments, internationally
and fraud free. This is ridiculously difficult (how many of you have ever
written software that integrates with a bank? ugh.) PayPal does this
exceptionally well and because of that many huge businesses are built on its
back.

The reality is, in most of the situations that people complain about freezing
their money, without paypal their entire project would've been a no-go anyway.

I do feel for people who legitimately have their accounts wrongly frozen (I am
one of them, though mine was unfrozen after a few days), but you have to
understand how small a percentage of people that is, and that you can't have a
system without failure. Again, paypal's failure rate, when you consider what
they actually do, is astoundingly low.

Edit: Just for absolute clarity - I work for Etsy and have zero affiliation
with the blog from the OP, and it has zero affiliation with Etsy. Also these
are my opinions not my employers etc.

~~~
joshu
IIRC Paypal was originally designed for interpersonal payments.

~~~
sk5t
Right on, Paypal was designed _exactly_ for Bob to send Sally $10.27 for
yesterday's lunch tab, according to Paypal's own promotion and vision on day
one. Letting businesses, charities, and other orgs use it as a payment
processor came quite a bit later.

~~~
skore
I think it's safe to say that they, quite reasonably, figured out that the
former is a risk-infested nightmare. Saying "hey, that actually cost $11,
Bob!" is a minor thing in an interpersonal relationship, but when it has the
potential to trigger a fraud investigation (think ex-girlfriend marking all
'casual' transactions as fraud after a breakup) you invite chaos.

So yes, they switched on that, but it's really not hard to see why. I wouldn't
want to use it for personal transactions. (In Germany, we mostly use bank wire
transfers for that.)

------
knightgj
I'll be looking at alternatives after receiving the friendly "We reviewed your
account and determined that there's a relatively higher than average risk of
future transaction issues" email that states they'll be holding my money for
21 days...

I have never made a claim. I have never had a claim filed against me. My
account receives maybe $500/year, tops. I send $500/year, tops. HUDGE risk of
transaction issues.

~~~
saurik
What are you selling?

~~~
einhverfr
When my account was frozen I was selling IT services, internationally, but I
was also told it wasn't about my transactions at all.

------
amorphid
It looks like PayPal's site for creating a donatiom button makes it really
easy to get yourself into trouble...

<https://www.paypal.com/us/cgi-bin/?cmd=_donate-intro-outside>

I don't see anything on that page to suggest you have to be a nonprofit or
somehow a worthy cause. They optimize their web page for encouraging people to
create a donation button and then provide you with a shitty experience on the
back-end if you make a mistake. They aren't trying very hard to keep you from
hurting yourself. This is why government creates consumer protection laws, so
maybe PayPal needs a big warning label next next the link encouraging you to
create a donation button.

------
saurik
"Donate" has a very specific meaning, at least in the US, and comes with
numerous accounting connotations, including the ability to write off the
expense. As many people don't realize that "charitable donations" do /not/
include "donations" to purchase toys for children, it is misleading to use the
term "donation" in this circumstance.

Meanwhile, often the person /accepting/ the donations doesn't understand this
either. You cannot, for example, accept a $5 "donation" and then send someone
a $5 product back to them: that is a "sale", not a "donation". You do not
"donate" to Ikea in exchange for a chair: you "pay" them $5 for it.

In this case, this person obviously doesn't get it. "Why? These are my
customers!" <\- Right, which is why they are not "donating". These "customers"
are buying toys, which are then being sent to other people on their behalf.
These are /purchases/, like any other. This seller even goes so far as to
state they are operating "just like any other retailer would".

At which point we ask the killer question: are they collecting sales tax? This
is where the theoretical issues suddenly run right into the brick wall of
reality, as sites that believe they are accepting "donations" on behalf of
charitable work, such as handing out toys to children, put everyone in a
position where they fail to realize that they are operating an online retail
store where the receipts need to be reported (to the IRS), sales tax needs to
be collected (for sales made to people in the same state), and the people
buying the gifts can /not/ write off the expense.

PayPal is therefore very right to be wary of these situations, and often
contacts people making the claim "only a nonprofit can use the Donate button",
as the PayPal representative stated in this e-mail. I know this, as they
contacted me once: I had a button "Donate to saurik.com" on the top of my
website, which I ended up changing to "Contribute money to saurik.com".

That said, I am actually not 100% certain that that is their official "for
everyone" rule. This author was correct when they said that "worthy causes" is
mentioned in the PayPal PDF [1] on this feature: a more full quote being "for
your nonprofit or worthy cause"; that said, the PDF also claims that when you
sign up for your PayPal account you should do so "selecting “nonprofit” as the
type".

(edit: Reading some more context of the story from Regretsy, including more
responses from PayPal, I think that what PayPal means by "worthy cause" may
actually be those "on behalf of verified non-profit organizations", not that
that is made clear at all in that PDF.)

Their website [2], meanwhile, only ever seems to talk about nonprofits, but
goes into detail regarding confirming non-profit status only for obtaining a
discount on processing fees. I can certainly see that this is confusing, and I
also believe I see a lot of websites around that /do/ use "Donate" in weird
ways; certainly, if they really cared to limit it to nonprofits, they could
actually enforce your account type /was/ nonprofit before letting you use it.

So, I personally believe that they simply contact vendors who seem to be
running a for-profit sales business (even one that is losing money or breaking
even "for the children") using "donate", rather than people who are simply
using "donate" "without being a non-profit". How do they figure that out, you
ask? My guess is that users are flagging the transactions as fraudulent, or
complaining to PayPal using the dispute transaction feature (which some PayPal
users treat pretty flippantly), using wording that indicates that they were
buying something.

(For the record: I'm pretty certain that's what happened to me. I /also/ run a
retail product called Cydia, which accepts payments through a separate PayPal
account for SaurikIT (my company). People can contribute money to the cause I
represent (open access to devices), or purchase things from Cydia. However,
some users would just send my personal account (which I use for contributions
to my work) $1.00, either by sendmoney or /my "Donate" button/, and then go on
to say that they paid me $1 for some product in Cydia and that I didn't send
it to them.)

In the end? While I think PayPal needs to be clearer on some things, I do not
actually blame them for their reaction here. This setup seems "sketchy", was
probably not handling the taxes on the sales correctly, was almost certainly
handling the "extra money sent to the family" part incorrectly, and in the end
went over the top with this emotional appeal (seriously? I have to have crying
children surrounding this text?) rather than looking at this as an
intellectual debate about PayPal's policies here (which might be interesting,
and might cause everyone, including them, to learn something).

[1]
[https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations....](https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations.pdf)

[2] [https://merchant.paypal.com/us/cgi-bin/?cmd=_render-
content&...](https://merchant.paypal.com/us/cgi-bin/?cmd=_render-
content&content_ID=merchant/donations)

~~~
Dylan16807
>In this case, this person obviously doesn't get it. "Why? These are my
customers!" <\- Right, which is why they are not "donating".

You seem to be confusing different things. After being unable to use
donations, they tried to use sales. And paypal said no. That's the context of
what you're quoting, after donations had been given up on.

~~~
saurik
This all seems to have happened during the course of the same conversation,
and reading more of their blog history I don't see them saying that they then
actually used a Buy Now button for any period of time.

Regardless, once the conversation started going farther in that direction, the
issue did change (and I did not touch on that part of the problem);
specifically, it became entirely surrounding "purchasing products sent to a
different shipping address than the one the buyer specified during checkout",
which is apparently against PayPal's terms of service.

(Note: I have not personally verified that it is against PayPal's terms of
service, but I have no reason not to believe the employee of Etsy, a company
that relies quite strongly on PayPal and certainly has gone down this road
numerous times with them while determining what features they can offer to
customers, who posted elsewhere in this thread [1].)

[1] <http://news.ycombinator.com/item?id=3318223>

------
CaveTech
It really perplexes me as to how paypal can get away with withholding money
from people. What is stopping them from simply picking accounts at random and
saying, "actually, I don't think you deserve this money, so we'll keep it."

~~~
dangrossman
When PayPal terminates an account and holds the funds, they're returned after
180 days. The same as any merchant account that's terminated. It's to cover
potential chargebacks, which can come in months after the fact -- though they
really shouldn't do that when the only payment the frozen account received
wasn't funded by a credit card.

~~~
quicksilver03
Does anyone known if when PayPal returns the held money they also pay the
legal interest? Or if they have some specific clause in their contracts that
allows them not to?

~~~
dangrossman
"legal interest"?

Reserve accounts at any merchant account provider I've ever heard of are non-
interest-bearing. It's probably a requirement of the Visa/MC Operating
Regulations to de-incentivize creating them without cause.

------
dgurney
I have never seen a company more in need of competition. I realize its massive
installed base makes it tough to approach, but isn't there somebody who can
compete credibly? I have to think that there's enough user dissatisfaction
that people would defect in droves, given a decent alternative.

~~~
thinkcomp
The regulatory situation has made it nearly impossible to start a payments
company in the United States.

<http://www.facecash.com/legal/brown.html>

------
jfruh
Yikes, are you really only allowed to use "donate" buttons if you're a
nonprofit? I use them as a "tip jar" on my blog. What's the options for for-
profit when you're giving money for nothing in particular?

~~~
8plot
Bitcoin is an option.

~~~
paulhauggis
I would never use Bitcoin. Mostly because the currency has a tendency to be so
volatile. I've seen it worth $30 one day and $3 the next.

~~~
haakon
> I've seen it worth $30 one day and $3 the next.

No. The downslide took considerably longer than that.

~~~
paulhauggis
even so, you're adding risk on top of the risk of running a business.

------
Joakal
Google does this too for the Donate button:
[http://checkout.google.com/support/sell/bin/answer.py?answer...](http://checkout.google.com/support/sell/bin/answer.py?answer=72721)

For a kicker, you MUST be based in USA otherwise according to their terms,
they'll hold the money like PayPal does.

------
james33
Almost this exact scenario happened to me a few months back, and they did the
same, asking me to sign an agreement saying I knew what I did was wrong (it
wasn't) and that I wouldn't do it again. I absolutely refused to sign such a
thing, and thankfully a friend of a friend knew someone in a high position at
PayPal that finally got it all sorted out. Two weeks of extreme stress later,
but at least it got worked out. Take unusual measures and if you are lucky
you'll get it worked out.

------
brown9-2
So just to be clear, when the Paypal rep says "We know what you are trying to
do and we aren't going to let you do it", what do they think the scam is?

That the site would accept "donations" for a fraudulent reason?

~~~
scott_s
Yes.

------
coderdude
Fun fact: The horror that is PayPal came from the same guy who gave us our
hope for the bright future of commercial spaceflight. PayPal has vertically
integrated every step required to stiff you. They can do it safely and
reliably, but a public mishap like this one may cost them.

~~~
daniel-cussen
I've been on this forum for a long time, and I'd estimate that a new Paypal
horror stories surfaces once a month. There's no shortage of them. Every one
of those costs them something, no doubt, but not enough for them to knock it
off.

------
alain94040
I'm sorry that you don't realize what you are trying to do is nearly
equivalent to a Nigerian scam, but in the eyes of a payment company, it is. So
cut Paypal some slack.

~~~
pyre
So:

1) You're going to tell me that those customer service interactions were
perfectly normal?

2) You think that at the end of this the customer should be forced to sign
something admitting wrong-doing? "I tried to take donations, but really it was
all a scam and I'm a scammer. Paypal was right to freeze my account." Even
when PayPal's own documentation was not straight-forward enough to let people
know that they should not be doing what the OP was trying to do?

------
sp332
This is an amazing, in-depth blog post that explores all the relevant policies
and web pages regarding the use of the donate button.
[https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-
is...](https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is-wrong-
regarding-regretsy-according-to-their-own-policies/) Still nothing! No
explanation anywhere on the site that might explain this behavior.

------
latchkey
I'm a huge fan of WePay. They don't play these games.

With all of the different competing solutions out there these days, I don't
know why anyone continues to use Paypal.

~~~
angusgr
If you're not in the US then the number of competing solutions (that don't
require a merchant account) shrinks dramatically.

I'm in Australia, and I don't know of one (have checked out WePay, Stripe,
Samurai all mentioned in the comments here.)

~~~
latchkey
Just curious cause I don't know how it works... do you just find a way to
create a foreign US company and run through that?

~~~
angusgr
If you're going to go that amount of cost/effort then it's probably just as
easy to create an Australian Merchant account and then find a gateway that
supports it. I don't know how the two compare cost-wise, though.

The thing about PayPal that appeals to me for collecting funds is that it
doesn't have that barrier to entry.

------
rlivsey
After using PayPal on a number of projects over the years (both successfully
and painfully unsuccessfully) I've come to the conclusion that PayPal is fine
if what you're doing is completely standard.

Once you start doing something that could be interpreted as even slightly non-
standard then it's more trouble than it's worth and the odds are that PayPal
aren't going to play ball.

------
ukdm
PayPal has unlocked the account and made a donation to Regretsy

[https://www.thepaypalblog.com/2011/12/regretsy-issue-
resolut...](https://www.thepaypalblog.com/2011/12/regretsy-issue-resolution/)

------
wbhart
I wonder if PayPal has misunderstood what Regretsy is doing.

For example, suppose PayPal think that Regretsy is buying cheap toys at cost,
marking them up for profit, adding the cost of shipping, then selling them to
customers as part of their ordinary business model (perhaps not even paying
sales tax on them), but of course agreeing to send them to poor kids instead
of the people paying the money.

PayPal would have every right to block such transactions, and I'd expect it.
It wouldn't be charitable on the part of Regretsy nor would it be donation to
a worthy cause, but a partial "donation" to Regretsy, a for-profit company. It
would be ordinary profit making on the part of Regretsy in the guise of
charity work!

I think Regretsy should just clarify with PayPal what it is they are actually
doing. If Regretsy are honestly doing this for needy kids and not for their
own profit, then I cannot see how it would be a win for PayPal to not
accommodate this in some way.

~~~
scott_s
I think PayPal does understand what Regretsy claims to do, and the problem is
that what they claim to do goes against their policies. PayPal does not allow
that kind of transaction because it's too difficult to prove that it's not
fraud. There are detailed explanations of this elsewhere in the thread.

------
jrabone
Anecdotal, but anyway...

Earlier this year, Paypal notified me that they required more information
about my personal account - namely confirmation that it wasn't a business in
disguise. Due to my mistranslating from American English to British English, I
accidentally declared that I was a charity (non-profit of course has a
specific meaning), and Paypal promptly froze my personal account.

It took one phone call to the UK helpdesk, and about 20 minutes to get this
fixed, and my experience with their customer support was fine. I screwed up,
they were polite and helpful, no problems.

What WOULD help is if their UI translated their terms for the benefit of non-
US customers (if they'd said "charity" instead of "non-profit" I'd never have
chosen that option) and gave you an obvious way to say "I am not a business"
(if they'd had that I wouldn't have been on that page in the first place), but
I can't fault their customer support.

------
vaksel
Paypal has a reputation for stuff like this...can't exactly be a surprise

------
dvdkhlng
Too much is too much. Closing my PP account. So far I haven't seen an online
shop that doesn't have alternative payment options other than PP. In Germany
(Europe?) we have ClickAndBuy [1], which works great so far. Buyer protection
is usually sold separately via Trusted Shops [2] (but has to be payed for by
the seller). This also eliminates the various COI arising from the payment
processor also trying to police account owners. And I can choose to not add
additional buyer protection costs for shops that I trust in.

[1] <http://clickandbuy.com>

[2] <http://www.trustedshops.com>

------
callmeed
I hope Square buys Stripe, figures out the international bits, adds some
features, and then starts eating away at PayPal's market share.

------
frankydp
<http://i39.tinypic.com/25fizw1.png>

Paypal wins still?

------
kmfrk
Looks like they settled it: <http://news.ycombinator.com/item?id=3320154>.

------
mrkmcknz
Looking at the detailed arguments in this thread, my only advice is to use a
little common sense. Or does that not exist anymore?

------
npc
I'm sure everybody knows by now, but this is certainly not the first time
paypal has done this kind of thing:

[http://www.somethingawful.com/d/news/paypal-fiasco-
summary.p...](http://www.somethingawful.com/d/news/paypal-fiasco-summary.php)
(slightly nsfw)

~~~
dangrossman
That's a story of how a payment processor froze an account that had a sudden,
incredible jump in processing volume, just like any payment processor in the
world would have done. When he contacted PayPal they, understandably, wanted
some evidence that the money was going to be used for the stated purpose,
because if it's not PayPal could be on the hook for $30k in chargebacks and a
few thousand more in fees. Instead of doing some work to provide convincing
evidence, he asks a CSR to donate all his account money to Red Cross which she
can't do, then gives up immediately and directs them to refund all the
payments.

I don't see anything about this story that makes PayPal look bad. Not
objectively at least. Subjectively, we'd like the fundraiser to have worked
out, but it's the processor on the hook if the fundraiser is a scam...

------
muppetman
I am SO sick to death of "I used Paypal, Paypal screwed me over" posts. The
first few times when it happened and no one was aware of how they operated,
sure, I felt bad for the person/people.

Now I just think "The definition of insanity..."

I guess I'm just an elitist prick though?

------
radimm
Wonder what percentage of users are facing such an issues with PayPal. As
somebody who's just in the middle of setting up payment solution (UK) with
PayPal, such a stories are not making it easy to justify the decision to go
this way.

In my eyes, PayPal is just another corporation, with all of its bureaucracy,
both processes-wise and the way how they handle their customer care.

My bank is not making it easier to get started (otherwise I would have
merchant account), so why would I expect PayPal would handle edge cases
otherwise?

EDIT: jdietrich already made this point
<http://news.ycombinator.com/item?id=3319045>

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taylorbuley
The donate button thing -- that's got to be because of tax reasons, right?

~~~
wpietri
Reasonable question, but no. Paypal's not responsible for that, and even if
they were the "it's ok to use it for a sick cat" thing is clearly not about
compliance with 501c3 regulations.

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URSpider94
At the end of the day, Paypal is a slave to the credit card associations. To
that end, whenever they find something out-of-the-ordinary, they have no
choice but to act. The sad reality is, they really don't have any latitude in
cases like this, if they want to prove to their credit card overlords that
they are tough on fraud.

For whatever reason, it seems that they'd rather be known for having terrible
customer service than own up to the fact that they are hog-tied as to their
policies on what kinds of transactions they can process.

------
Tangurena
Paypal wants to be a bank without being regulated as a bank. If they were
regulated, this sort of fiasco would get their charter revoked.

In addition, the business courses I'm taking all (in the text books and case
studies used in classes) point to how eBay is trying to transition away from
the auction model and turn into fix-price sales as some sort of discount
Amazon Marketplace. Making life miserable for smaller retailers and auctioners
is part of this goal.

------
whyme
Out curiosity, why wouldn't PayPal just put categorical warnings on the
payment page that allows merchants & buyers to assess the risk themselves?

So if a merchant understands these relative risks, they can opt in to a high
risk warning category, in order to make sure accounts don't become locked, and
buyers can then fully understand what they're getting into via the warnings.

I mean really this is all about liability right...or maybe is it that I'm
expecting too much...?

~~~
dangrossman
All the warnings in the world wouldn't reduce the liability one bit. The
liability is that the buyers (donors) are unhappy for any reason and charge
back the payments. If it turns out the fundraiser was a scam and that's outted
publicly, all those donors may well do just that.

The OP's story says they got "thousands of $2 payments". Let's say 3000.
PayPal could, potentially, see $6000 in chargebacks, $900 in transaction fees,
and $45000 ($15 * 3000) in chargeback fees assessed by the card-issuers.

If the fundraiser disappears or doesn't have a spare $45000 sitting around
PayPal is on the hook for that.

They're not going to file 3000 court cases to recover it, no matter what
warnings were on the site.

------
Cyph0n
AlertPay is a good alternative. Fees are a bit high, but there is no such
thing as a "limited" account, unless you send/receive fraudulent funds of
course.

The problem is that AlertPay is not accepted by many online services. Once
that is solved, I believe that it could probably compete with PayPal.

------
D_Drake
Never before have I read an article and been greeted by the mental image of a
vein bursting in my brain, the blood spewing out of my eye sockets, forming
itself into an axe, and traveling through a magic portal to mutilate a
company's board of directors.

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antninja
There's a script in this blog page that makes Firefox freeze and crash.

~~~
dvdkhlng
You mean there's something in Firefox that makes it freeze and crash on a
script in this blog page?

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JonoW
I'd love to know more about the legalities of a company (that isn't a bank)
withholding funds for months. PayPal must be making a pretty profit on the
interest accrueing on those accounts.

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Hilyin
Paypal is a bunch of scumbags. They deserve to go out of business.

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loceng
PayPal is just as likely to hold funds for 6+ months if you're not selling a
product if using "Buy Now."

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joshuap
Someone should start an anti-paypal campaign that recreates the paypal
buttons, except they have a big red X through them, and link to a collected
list of grievances. I'd put one on my site... I dealt with all this garbage in
2004 and haven't used them as a seller since.

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InclinedPlane
No sympathy here.

Abusing "donations" on paypal to avoid paying fees and taxes is not a good
business practice. Either own up to the fact that you are indeed selling
something or incorporate as an actual non-profit, neither is particularly
onerous.

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scottshea
I am so glad I turned down that job with Paypal

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TheAmazingIdiot
I'm going to be somewhat direct here.

I allege that what Paypal is doing here (holding funds over 10 days) is
illegal.

In order to do what Paypal does in the USA, you need licensure. They point out
that they are not a bank. Indeed, they aren't: in many states they are
classified as a money transmitter. In 8 states, they have no license to
operate.#1

And, Indiana also requires licensure for money transmission. IC 28-8-4-20 (a)
A person may not engage in the business of money transmission without a
license required by this chapter.

What is this money transmitter stuff? In essence, the law in all the locales I
have checked (I have not gone through every one), indicate only a short
holding period (5-15 days) and only allow holding of money of a known crime.
So indeed what they do is absolutely fraudulent. In other words, if you have a
patent troll corporation with many lawyers, target Paypal for their illegal
behavior. #1 Source: <https://www.paypal-media.com/state_licenses.cfm>

~~~
thinkcomp
Indiana has an unwritten policy of only requiring licenses of companies with a
physical presence in the state. Other states (Massachusetts, South Carolina,
Montana and New Mexico) do not require licenses for domestic money
transmission at all. The other three have likely determined that PayPal does
not meet the criteria for licensure in that state.

PayPal may very well be exceeding the holding period threshold in some states,
but someone would have to bring suit to push the issue.

------
dr_
i use dwolla

~~~
andrewfelix
I'm in Australia :(

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nclark
uhm... don't use paypal?

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B1aZer
Next time use bitcoins )

------
severance
<http://bitcoin.org/>

