
PayPal robbed my bank account - jacquesm
http://www.jacquesmattheij.com/PayPal+robbed+my+bank+account
======
jellicle
The whole idea behind Paypal was:

\-- we'll do everything a bank does, but without all those "laws" and
"accountability for mistakes" that the other banks labor under

Go on, look it up.

And they achieved that goal. Paypal largely escaped regulation as a banking
entity. Banks are trustworthy with your money (to the extent that they are)
not because they're magically trustworthy, but because there is a regulatory
state forcing them to be. Paypal has no regulatory apparatus overseeing it.
Paypal will steal your money and your only recourse is to sue them.

PayPal has made the calculation that the vast majority of their customers will
not sue them. Therefore, it is profitable for Paypal to steal from these
customers. This is now common knowledge. If you use Paypal today, you have no
excuse for not knowing that they will steal your money.

~~~
johnitsagal
How come nobody sues them? How come there hasn't been enough of an uproar to
get congress involved in regulating PayPal?

Reading HN, these horror stories seem to be fairly common, or maybe I'm just
hearing the same stories over and over again.

~~~
Vivtek
I've been using PayPal since 2001 when I signed up in order to send Sluggy
Freelance a $5 donation. Since 2002 I've used it increasingly for payments
from my freelancing customers - there was no other convenient way to get money
from Europe to America, and PayPal revolutionized the translation industry
(along with Moneybookers and similar services, but PayPal is the biggest).

Not once have I had any problem with them.

Jacques, I've had a bank - a real live regulated bank - deduct my paycheck
instead of depositing it, and not notice until I complained. Granted, they
fixed it immediately when I complained, and PayPal may not, but human error
does occur. Certainly PayPal has never gratuitously deducted money from my
account.

~~~
matrix
Here's the thing though: when the bank made a mistake, you had recourse. You
actually had someone to complain to - you could go to a branch or otherwise
deal with a human. With paypal, you have no recourse, except to hope your case
gets voted to the top of Reddit and some paypal insider takes pity on you.

~~~
krakensden
you're overestimating the worth of that human- retail banks are generally
franchisees, and they have very limited powers. If the problem has to be
escalated, you're in the same place as you would be with Paypal, except BoA
insiders don't read reddit.

~~~
meric
You're with the wrong bank maybe. Once upon a time I overdrew my account by
$10 and was charged $35 overdraw fee. My account balance became -$45. Someone
sent me $50. I then withdrew another $50, and because the account balance was
negative again, I was charged another -$35 and left with -$80. When I found
out I was angry, I knew the rules were that if you overdrew your account you
have to pay a fee, but it seemed ridiculous that they'd charge me _twice_ when
it only ever briefly went over 0 again. So I went to my local branch and asked
one of the bank staff about it. They apologised and reversed not just the
second overdraw fee but both as well! Quite happy with my bank that day; The
rules were there and I knew them but they still refunded all my fees back.

~~~
Vivtek
I can't even imagine a Chase teller doing that, and I like the people at my
bank.

~~~
meric
It was the commmonwealth bank of australia.

~~~
krakensden
I'm from the US, perhaps that's why we don't see eye to eye?

------
demallien
Ugh. Yet another PayPal disaster. I'm gearing up to go live with a new Mac
application in about 6 months time, and I had planned on using PayPal as the
preferred payment method, as it seems to come with the least headaches. But it
seems you can't go a month without yet another PayPal tragedy popping up on
HN.

Is there any other payment service out there that doesn't have as many
problems (especially with customer service) as PayPal? Or better yet, is
anyone on HN creating a startup to handle credit card payments that I could
use instead of PayPal - ideally, it needs to be dead simple to use - I'm
thinking less than 20 lines of ruby, or 50 lines of C to use. Anyone working
on something like this?

~~~
2arrs2ells
Google checkout?

~~~
masklinn
Nope. The experience is just as crummy, the support is even worse and there
are pretty big geographical restrictions on both sides of exchanges (sales and
buys).

For instance, as far as I know you still can't buy or sell from Canada (with a
canadian bank account anyway) via Checkout.

Only alternatives are going straight for the credit card, or using
international bank transfers (which I doubt are without hassles)

~~~
GFischer
For single payments (freelance stuff or whatever), Western Union (
<http://www.westernunion.com/> ) might be the way to go.

I received money via WU for about a decade with zero problems.

But for online shopping, I don't have an alternative.

~~~
rmc
Western Union is aimed at transfering money, not buying/selling goods. I had
to transfer money to someone with WU and had to ring them up to verify it.
They explicitly asked on the phone if I was sending money in exchange for
goods, and that they don't support that, and you shouldn't use WU for that.

This is would scare off most customers and is not a good business idea.

~~~
GFischer
I think those kind of checks are country-specific... I always received money
here in Uruguay (from Austria and Canada) and nobody called the senders
(family members or friends of family).

Still, you're right... Wikipedia says: "Western Union advises its customers
not to send money to someone that they have never met in person."

------
jcroberts
jacquesm, There are two potential solutions. The first is having a separate
bank account specifically for use with paypal. This gives your "real" bank
accounts some degree of separation from the at-risk account you've used to
become "verified" according to paypal (note the unhealthy amount of sarcasm on
"verified"). This is the only working approach if you must be "verified" by
them.

The second method is far better; _ONLY_ give paypal a credit card number. You
will not be "verified" according to paypal, but you now have control. If
palypal does anything stupid, you just file a dispute/charge-back with your
credit card company. When you reach the stupid "spending limit" for an
"unverified" account, simply delete your credit card number from your paypal
payment methods, then close your paypal account. Now you can create a new
paypal account with a new email address and the same credit card. The result
is you just by-passed their spending limit that _forces_ "verification" when
reached.

EDIT: Yes, I feel giving paypal your bank account credentials is absolutely
foolish. They try everything they can to get access to your bank account(s),
but at least there is a way around their stupid games.

~~~
jacquesm
We're in the 'first' situation now, but the downside is that if paypal _does_
decide to plunder your account that you are instantly below 0. I never even
realized they could do that until it happened.

The second method is better but unfortunately paypal would not authorize any
payments (from my credit cards!) until they had a confirmed (and thus
accessible) bank account.

~~~
jcroberts
> unfortunately paypal would not authorize any > payments (from my credit
> cards!) until they > had a confirmed (and thus accessible) bank > account.

Please elaborate. I'm not sure what you mean by this, and there may be (are!)
differences between how paypal operates in the .us versus the .eu.

Were you not allowed to _send_ money with only your credit card on the paypal
account?

Or were you not allowed to _receive_ money with only a credit card on the
paypal account?

Sorry. It's late here, I'm tired, and I'm not reading your words as clearly as
I should. Though I haven't done much in recent weeks, I do volunteer work for
a non-profit organization here in the US that specializes in helping victims
of online fraud. Sadly, the "paypal drained my bank account" story is repeated
regularly.

~~~
jacquesm
> Were you not allowed to _send_ money with only your credit card on the
> paypal account?

Yes. They kept asking for a verification of the account, without that no
further processing possible. Please note that this is a corporate account, not
a personal account.

> Sadly, the "paypal drained my bank account" story is repeated regularly.

ouch.

~~~
jcroberts
Ahhh, though you said "corporate account," I'm betting you actually mean a
"Merchant Services" account. There are actually a number of different types of
paypal accounts, each with their own set of rules and features. Paypal --very
intentionally-- tries to confuse people by not clearly listing both the
various types of accounts and the various risks associated with them. They
also very intentionally do _EVERYTHING_ they can to get your bank account
credentials.

For example, in your situation, there may have been a somewhat hidden link to
"other payment options" but of course, the only default you saw was "enter
your bank account number." Paypal pulls this shit constantly, and all it takes
is one wrong click (or less than careful reading) to trap you into an endless
page reloads of "please enter your bank account" nonsense. --It's extremely
scammy and they use every anti-pattern in the book, heck, they probably wrote
the book.

I should also note, NEVER use a bank account debit card with paypal or online.
These are also another way your bank account can be completely drained by
attackers or less than honorable businesses.

~~~
jacquesm
> to trap you into an endless page reloads of "please enter your bank account"
> nonsense.

That pretty much describes what happened.

I will take your information to heart and get paypals access revoked and I'm
going to close that account and open a new one just to be sure.

Thank you very much for the helpful info, I knew paypal was bad, I always
thought the 'bad' limited itself to my balance on their end (which I made sure
I never had).

This is a bit of a shocker really.

~~~
jcroberts
I wish it wasn't such an unpleasant shock for so many people, but very few
people even think about how something actually works and the risk models being
used. In the case of paypal Max Levchin (sp?) created a brilliant fraud
detection (risk analysis) system, and also made sure to mitigate risks to his
company by making sure someone else could be put on the hook when something
goes wrong (i.e. why they press so hard for direct access to your bank
accounts). Even though it is a brilliant design, and a profitable business,
the entire company is dubious because it profits from putting normal people
(users) at risk without ever informing them of the risks.

------
CWuestefeld
Real banks make mistakes all the time.

I once had a $35 check clear the bank for $4,035. That caused a domino effect
of bounces. But the bank fixed it up -- I even got them to write me a letter
of explanation to give to my landlord, and use in the future for any credit
questions.

My wife is a bit anal about the bank (she's an accountant). She used to call
the 800 number every morning (that was before online banking) to double-check
the balance. It was quite common to see random discrepancies of as much as $5,
which would resolve themselves the next day (this was a different bank than
the anecdote above). I have no idea how that happened, but it didn't seem to
make any difference to the monthly bottom line.

~~~
cosmicray
> Real banks make mistakes all the time.

Indeed they do. Not only do banks make mistakes, but the Federal Reserve does
as well. For those who don't know this, the Fed is responsible for national
check clearing (other than bank-to-bank cash letters, what we in IT would call
direct peering). The Fed is the operator, for check clearing, of what we would
call the core routers.

A number of years back, the Fed made a mistake in my favor (a sizable
mistake). I discussed it with the bank. The bank said they had to wait for the
Fed to resend them the correct item. We're both still waiting. Sooner or later
I'm going to give up waiting :)

~~~
Retric
If it's a significant amount of money you should probably talk to a layer of
some kind before you "give up waiting :)"

However, chances are this is one of those wait 7 years from the event then
close the acount and keep the money.

------
cturner

        Now, for me a BANK (which is what PayPal is here in
        Europe) 
    

If they are a bank, I'd anticipate that you could call them and insist on
speaking to a compliance officer. Keep a log book, if they fail to do so,
complain to the regulator.

~~~
bond
They are registered as a bank in Europe so they must comply with European bank
regulations...

------
danielnicollet
Just a tip for those who are looking for a US-based alternative. I have just
done a study of various payment processors here for our startup
(<http://commerce.exorbyte.com>). While PayPal may appear cheap with their low
flat fees on all cards, their monthly fees, transaction fees, etc. end up
costing you.

My conclusion was that there are much better rates and better service with the
company that provides us already our accounting software (Intuit - QuickBooks
Pro). Their rates are about a third of what Paypal asked in terms of monthly
subscriptions, even lower if you are referred by Intuit Pro Advisor (just say
you are if you know one - or look for one in their online public DB).

I trust much more a company that provides more than just payment services than
one that does that and only relies on payment fees to enrich itself. Good
luck, Dan

------
rlpb
> Much to my surprise, about a half hour later, paypal _reversed_ the charge,
> but the amount was paid in to the account of the recipient. Free money, or
> so it seemed :)

If I understand this correctly, double entry bookkeeping should have made this
situation impossible (or, at the least, Paypal should then notice their net
loss). It's a bit worrying to see indications that Paypal's internal systems
can't keep track of money correctly.

Have you considered reporting this to your regulator?

~~~
jacquesm
> Have you considered reporting this to your regulator?

We're getting there.

I have plenty of stuff to do but if this is not resolved within the next 7
days or so (and that includes backdating all transactions so the effect on my
standing with the bank and lost interest are corrected) there will be trouble.

------
brc
I just want to be a lone voice for PayPal here. I expect downvotes but want to
show a different point of view.

\- PayPal is not a bank, you don't get the same level of customer service or
regulations. However, you don't pay anything like the sorts of fees that you
would with a bank for sending/receiving money, especially as a merchant. Try
applying for a merchant, online only, account with a bank as a startup and see
how far you get.

\- PayPal processes a lot of transactions daily, globally, all with accounts
that they know very little about. As such, their fraud detection is turned up
a lot higher than a regular bank. They're obviously paranoid about any
difference in patterns or strange occurences, and the usual response is to
stop everything until it can be sorted out. In most cases it does get sorted
out but that's after the anger has died down.

-Banks and credit card companies make mistakes all the time. My credit card issuer is always sneaking unjustified interest charges. I have to call and reverse them all the time. I've had banks bounce checks for no reason, charge me fees which cause the balance to go below zero, then charge more fees for it. That's stealing as well, but everyone shrugs their shoulders and says 'banks, what can you do'.

So my summary is : yes, dancing with PayPal is holding a Tiger by the tail,
but there aren't really any alternatives. They can suck, but they're a cheap
and reliable service.

But don't think that any amount of bank regulation would fix things. If they
had the customer service of a bank, they'd have to charge higher fees. With
the low fees, you should have low service expectations.

~~~
InclinedPlane
Another factor here is the "fear of the new". Which is worse, dying in a car
accident or dying in a nuclear blast? Well, neither really. But which
generates more fear in you? Dying in an accident can easily be a horrific,
painful death, but everything else about it is familiar, so we turn down the
knob on the fear-o-meter on the idea.

Similarly, banks treat their customers like crap all the time. But it's a crap
that everybody has grown used to and come to expect. But when PayPal makes a
mistake or has bad policies or poor customer service in any instance people
will scream to high-heavens on the internet about it until the entire world
has heard.

For myself, PayPal has treated me better than at least half the banks I've
ever had accounts with (especially Bank of America), so I'm inclined to give
them a little slack now and again.

------
gst
Seems that you're from the Netherlands or from Belgium.

Are such "wrong" charges really an issue there? In Austria I would just let my
bank cancel those charges (you can do this for free) if they are not
justified.

As far as I know, going below "0" wouldn't be a problem either, because the
bank then retroactively "recalculates" your account history without the
charges in question.

------
cperciva
How is all of this reflected (if at all) in the account history on the paypal
website?

~~~
jacquesm
It shows 13(!) transactions in total, let me try to put something together
that you could make sense of.

The paypal transactions do not correspond 1:1 with the bank stuff, which makes
it a lot harder to follow.

here is the png with the paypal situation (I'll add it to the post too).

<http://pics.ww.com/d/427289-1/paypal3.png>

Voltooid = completed Verrekend = corrected Mislukt = failed

I wished I had a reliable alternative to paypal, a company that just does one
thing and does it well, transfer money from me to third parties without all
the bs that paypal makes me deal with.

On top of that they caused me a bunch of trouble with my bank which I'm really
not happy about.

What you would expect, for 3 transactions is three entries on the paypal side
and three entries on the bank side.

Instead you get 8 transactions on the bank side, 13 on the paypal side and in
some of those the amounts do not even match up with the invoices that were
paid, which makes for a huge problem for the bookkeeper at a later date when
he has to piece it all together again.

~~~
lwhi
I think the last transaction mentioned in the body text should have referred
to dollars (rather than euros).

~~~
jacquesm
It says '$500' right ?

Or do you mean a different one ?

There are only 3 transactions, one E 550, one E 1000, one $500. That's it.

edit: Ah, my bad, that was not a transaction but an exchange rate calculation
and I got the unit wrong. Thanks!

------
sams99
And I was reading this today
<http://tortoisesvn.net/howpaypalscrewsopensourceprojects> ouch

~~~
metachris
More on this topic:

* <http://sourceforge.net/apps/trac/sourceforge/ticket/13993>

* [http://sourceforge.net/blog/warning-to-open-source-projects-...](http://sourceforge.net/blog/warning-to-open-source-projects-know-your-rights-with-paypal/)

I didn't realize PayPal also froze the account of the developer of minecraft
(containing about €600,000):

* [http://notch.tumblr.com/post/1096322756/working-on-a-friday-...](http://notch.tumblr.com/post/1096322756/working-on-a-friday-update-crying-over-paypal)

* [http://en.wikipedia.org/wiki/PayPal#Criticism_and_limitation...](http://en.wikipedia.org/wiki/PayPal#Criticism_and_limitations)

~~~
citricsquid
The Minecraft story isn't a good example. Markus had an account taking maybe
1k euros a day for around a year, then suddenly in a month it shoots up to
100k euros a day. It would have been negligent of Paypal _not_ to temporarily
suspend payments when someone without a history of taking that much money
suddenly does.

The solution is not to build a business around Paypal. If Paypal suspending an
account you operate for 14 days is going to cripple your business you should
look into new solutions.

~~~
invisible
As far as I can tell it was more than 2 weeks (or may still be a problem
currently). I don't think freezing all of the money for an account because of
some chargebacks and/or fraud should be what Paypal does. I understand if they
need to freeze a certain amount - but make a phone call to the person when it
concerns more than half a million dollars. Why collect phone information if
they never use it to call in extreme cases?

~~~
citricsquid
It is no longer a problem, unless you count Paypal requiring that he retains
at least 5% of total transactions in his account (until the start of 2011) as
being a problem. It should also be noted that _many_ people have filed charge
back requests for Minecraft through Paypal and their credit card companies,
Minecraft has virtually no customer service, so when Paypal see sudden huge
volumes of payments _and_ lots of charge back requests it seems mighty
suspicious. It seems to me like part of an investigation would be waiting to
see if any more complaints come through and something _bad_ is discovered.

------
wnoise
Given all the horrible things they do, why do people still grant PayPal access
to their money?

~~~
jacquesm
Suitable alternative please?

The only one that I have that will work in all these cases is Western Union
and their fees are horrible.

~~~
cool-RR
I think PayPal has become bad enough to justify taking the "suitable
alternative" search to the next level. Like considering a change of career or
company strategy.

------
smutticus
You have the same bank as I do, Rabobank. My suggestion would be to contact
them and demand the money back. I've had similar problems when other companies
stole money from my account. I've called Rabobank and they've gotten my money
back.

Forget about PayPal they'll never help you. It's not in their interest. In The
Netherlands once you give a company the right to take money out of your bank
account you have to watch them. Because they can take as much money out of
your account as they want whenever they want. And their only consequence as
far as I can tell is that I can ask for it back and get it.

------
jseliger
Something similar happened to me --
<http://news.ycombinator.com/item?id=1664224> for the gory details -- they
didn't go in my bank account, but they did send me to a collections agency. I
paid, sued in small claims court, and have never used Paypal again. That
anyone would continue to use Paypal astonishes me.

~~~
krelian
_sued in small claims court_

Did you win?

~~~
jseliger
Sort of. They gave me half the money back to make me go away. Given the amount
of hassle getting that half of the money back entailed, however, I'd say I won
the battle and lost the war. At the time I was filled with righteous anger at
PayPal: How dare they treat me this way? Years later, and PayPal is still
doing the same kinds of things.

------
voidpointer
If you feel like PayPal stole from you, shouldn't you be contacting the
police?

------
tszyn
According to the PayPal agreement for the Netherlands "To obtain Verified
status you must complete the following steps: 1) Set up Direct Debit and
complete the Random Deposit Process (available to applicable customers); or 2)
add a credit card and complete the Expanded Use Programme." So it seems you
don't have to give PayPal direct debit authorization to lift the receiving
limits. Am I right?

------
sanj
I'm still flummoxed that people give PayPal access to their bank account.

I give access to a credit card, knowing that I'll only be liable for $50, but
nothing more.

~~~
SriniK
Good point. I give access to my secondary bank. This avoids extra charges when
I pay to a friend.

------
chmike
I used money bookers (<http://www.moneybookers.com>) once and it was OK. A bit
expensive but exactly what I needed.

I considered using PayPal but every time I read the contract it scares me
away. I am required to allow them to get money out of my bank account. There
is no way I'll ever do that. Money bookers works differently and it is more
trustworthy.

------
blrgeek
Jacques, if you're in the Netherlands (as your whois indicates), then you
should file a complaint with KiFID, your financial services regulator.

<http://www.kifid.nl/overkifid/contact>

In India, most issues that the banks don't bother about get resolved very fast
with a single complaint to the regulator!

------
known
Does Visa/Master/Amex have their share of PayPal's robbery? Why are they not
offering an alternative and credible service?

------
InclinedPlane
Site appears to be dead now (DB appears to be down), here's a cached version
via google:
[http://webcache.googleusercontent.com/search?ie=UTF-8&q=...](http://webcache.googleusercontent.com/search?ie=UTF-8&q=cache:http://www.jacquesmattheij.com/PayPal%2Brobbed%2Bmy%2Bbank%2Baccount)

~~~
jacquesm
Hm, strange, I checked and it works again...

------
stakent
Solution for personal account:

I have a personal Paypal account associated with Visa credit card. The card is
for the use on the Internet only and available money amount can be set by me
as necessary.

If there is not enough money on the card then transaction fails.

I don't know if it is possible in case of company Paypal account.

------
HeyLaughingBoy
Yup, and when I pointed out a few weeks/months ago that I keep a "PayPal-only
bank account" and regularly sweep funds out of that account to another they
can't touch, people said I was being paranoid!

Well just because you're paranoid doesn't mean they can't get you!

------
iwr
So what's wrong with setting up an account with a payment processor rather
than paypal? The processor only provides the interface, but does not actually
hold money hostage or have other arbitrary restrictions.

~~~
lsc
you must have much better credit than I do. Every payment processor that will
do business with me 'holds' 25-50% of my money for a certain number of
_months_ even when you aren't doing something suspicious.

Now, last time I looked was a few years back, so things may have changed, but
this was my experience last time I had a merchant account... Paypal isn't any
good, but they are the best of a bad lot, as far as I can tell.

~~~
jasonlotito
25-50%? I never saw that rate, and I've dealt with a LOT of processors. 5-10%
is common. It's what the banks hold in case of chargebacks.

~~~
lsc
this was a few years back... so it's quite possible that I am misremembering.
I do remember that it seemed like quite a lot, and these were the days before
authorize.net was willing to hold the credit card numbers for you... between
those two things, I decided that at the time, paypal was a much better option.

~~~
jasonlotito
I operated in the high risk space from 2002-2007 and we never had holdbacks
that high. 5-10% was normal.

~~~
jacquesm
From which country ?

Define 'high risk' please ?

------
dbrannan
I only use PayPal to deposite into my bank.

I only allow them to access funds through a credit card, that way I can
contest the charges.

Come to think of it, I never give any organization access to my bank account -
ever!

If that is paranoide so be it.

------
known
Why PayPal doesn't use escrow protection?
<http://escrow.aliexpress.com/buyerprotection/index.html>

------
lisper
I'm surprised that after more than 100 comments no one has mentioned Square as
a PP alternative:

<https://squareup.com/>

~~~
chmike
Squareup doesn't provide the same functionality as PayPal.

------
kenjackson
Dumb question, but with the free $1000 didn't he still come out ahead or did
that eventually withdrawn from the account too, which I missed?

------
w1ntermute
Does anyone know how to unlink PayPal from your bank account? I can't find
anything online other than "talk to your bank".

------
netcan
Just removed my bank account from a (rarely used) paypal account.

How is paypal still the only player in this space? I don't understand it.

------
vaksel
you know what I don't get...is why with all the paypal stuff like this
happening...why don't the banks themselves create their own paypal type
service

you can use your ATM card at any bank...so banks can work together...they
should just create bankpal and have it be a service you can use to send money
to your friend's account

~~~
jules
This already exists. For sending money to a friends account you just log in to
the bank website, type their bank account number and the amount and voila.

For sending money to companies there is something called iDEAL. On the
company's website you click checkout and you get sent to your bank's website
where you get a page with the amount and a button to confirm. Unfortunately
this iDEAL system is currently only available in the Netherlands.

~~~
vaksel
account # is way too long, I meant something that is tied to an email address

~~~
chmike
Money bookers use the email address as identifier (at least some years ago
when I used it). <http://www.moneybookers.com>

