
So, I tried Dwolla - aatifh
http://blog.goodstuff.im/dwolla_clowns
======
ok_craig
The other day I was trying to make some kind of transaction with Dwolla, and
before I could, they asked me a series of questions to verify my identity.

The questions had obviously been pulled from a background check based on my
name that I didn't know they had done. It was asking me what the price of a
house was when I originally bought it, and what street I lived on in a given
time period.

Outside of this being really creepy, all of the questions weren't actually
useful for identifying me because _they all applied to my father_. I am a Jr.,
and the background check must have been run for my dad.

I also now have a reasonable idea of the price range my dad paid for a house
that we moved into when I was 7, which I never would have known or asked about
otherwise.

At this point I'm afraid to continue using the service. They allowed me to
transfer $1,000 into it, but apparently don't know enough about me to let me
make certain transactions. They should get everything they need for me to use
100% of their service up front, and not have this staggered approach where
additional identity info is required to transfer money, at the last minute
when you're trying to do the transfer.

Right now it seems that they could at any arbitrary moment determine that they
haven't actually identified me well enough, and suspend my account.

I don't think Dwolla is the payment solution we've been looking for. At least
not yet.

~~~
wmf
My understanding is that Dwolla is trying a fairly unusual approach to
handling fraud, which is that they pay out of their own pockets for fraud
(instead of kicking it down the line as all other financial institutions do)
but this requires that they actually _prevent_ fraud, not just identify it
after the fact. And the cost of _really_ stopping fraud turns out to be
something that many people do not feel comfortable paying when they're
personally confronted with it.

~~~
spinlock
Kind of, Trade Hill lost a hundred thousand or so when Dwolla falsified their
tranaction record and stuck them with the fraud. This was a bunch of reversed
ACHs (which Dwolla claims they don't allow). Very shady company.

------
cykod
Clowns implies that they screwed something up or did something wrong - from
his story, he signed up and moved 5 figures of cash immediately (which is
either exactly the limit of a business account or over it, see
<https://www.dwolla.com/about> ) if I were in the payments business (and I was
previously) this would have been a fraud red flag.

This is something that happened today (April 18th) - this is not five days of
waiting around for money to free up. This is a gripe because the author
triggered ever fraud alarm in the book and they have not responded fast
enough.

I'd lean towards the "give them a little bit a of break" - yes it sucks he had
to provide additional documentation and they haven't sorted it out yet, but no
business could allow anonymous folks on the web to sign up and move 5 figures
of cash providing only publicly available information as documentation.

~~~
alanctgardner2
This is an excellent point, the site says "Up to 10,000 for businesses, with
the possibility of increasing it". So obviously he's opened a brand new
account, and then tried to pull more money than he's authorized for. That
seems like it would take some time, and I would have talked to Dwolla before I
had them send the money.

On a side note, I love their payment method comparison matrix (on the page you
linked). It's factual, but a bit cutesy, and just a little bit mean to Paypal
(who totally deserve it).

------
hexis
I opened an account about a year ago and did nothing with it. I had my account
suspended about a week ago, after not really touching it that whole year. When
I asked Dwolla about it, they couldn't tell me why it had been suspended, so I
just closed the account. Very unprofessional, all around, I was very glad I
never attached any real accounts to it.

------
uuilly
I tried to use Dwolla and it it was absurd. I set my account up fine. My
friend sent me $1200 for a ski lease. I withdrew it and it appeared to work.
Days later when the money did not appear in my bank account, I checked back
and it said, "processing withdrawl" (or something like that.) It said that for
many days before I contacted them. They said I needed to scan my drivers
license and send it to them. The only account that has a copy of my DL is the
DMV. No other company in capitalism asks for a scanned DL except for (maybe?)
my employer. They had my social for crying out loud! And their UI was so
broken that it wasn't clear that anything was wrong. At that point I refused
to deal with them and kicked the money back to my friend and had him go
through paypal. To top it off, they won't delete my personal details from
their servers.

~~~
aidenn0
Every bank I've opened an account with has asked for photo id...

~~~
greyboy
Interesting, none of my (four) banks have asked for photo ID. Two of which
were started online (but are still a traditional bank).

~~~
dangrossman
When did you open those accounts? "Know Your Customer" (which basically
translates to SSN, government-issued photo ID, and blacklist checks) has been
required of all US banks since 2003 thanks to the 2001 PATRIOT Act.

When I was 15, I was able to open a checking account by mail with no ID.
Today, every bank I use lists government-issued photo ID as a requirement
right on the website before you can start applying.

~~~
mcherm
I work at a major online bank in the US. We have strong "Know Your Customer"
policies as required by the Patriot Act, but they do not, in the normal course
of business, require a copy of an ID. The Patriot Act does not require IDs, it
requires processes to identify the customer, and different banks approach that
differently.

~~~
dangrossman
Is that a relic of their being a Dutch bank until last year, or did CapitalOne
actually change their application process at all?

~~~
mcherm
No, ING Direct USA was always a United States bank regulated by US regulators,
it just happened to be owned by a Dutch parent company (and thus ALSO subject
to THEIR regulators in some ways). Capital One since taking over and
rebranding as "Capital One 360" has not made any major changes to the Know
Your Customer process or the application process. As I explained before, the
legal requirement is to identify the customer, and there are a variety of
different ways to do this which are acceptable to regulators.

------
etfb
America is a funny place. You can get 127 varieties of salad dressing at your
local supermarket, but you can't pay for it except with cash, unless you want
to be hit with credit charges, and when you do the prices are not as marked.
Australia, in sharp contrast, has laws requiring that the price on the shelf
matches the price at the register -- some of them even allow you to get
incorrectly-priced items for free, although technically this is a voluntary
agreement among shops, not a law. Also, Australia has EFTPOS nearly
everywhere; in fact, people are justly suspicious of retail businesses that
don't provide EFTPOS, because that's one of the first signs that the business
is probably going to go under. And if you want to transfer money, the same
system that makes EFTPOS ubiquitous makes direct deposit from one bank account
to another a very simple thing. The result is that cheques ("checks" in US
English) are very rare indeed, and people really only use credit cards for
online purchases or when they're already living beyond their means. (Which
means the use of a credit card in day-to-day spending is another warning
sign!)

Granted, it's hard to get all 127 varieties of salad dressing here, so there
is that.

~~~
timdorr
I haven't ever been subject to differing costs between credit/debit card and
cash prices, with the sole exception of the liquor store. Are there specific
stores in the US that do this?

~~~
etfb
Credit cards have fees -- interest, account-keeping fees, and so on. It's why
banks like them.

~~~
pfisch
Only if you don't pay them off immediately, or you agree to an annual fee for
specific benefits.

~~~
lmm
Depends on the card. I've got one that charges interest on purchases even if
they were made in that same month. (In general you're right though)

------
ryanackley
My Dad owns an ACH processing company. This is typical for any electronic
payment processor. It does sound like they went overboard with the identity
verification.

It just goes to show that disrupting payment processing is not just about some
awesome new payment API. It's also about preventing fraud and crime without
pissing your customers off. From my observations, this problem has yet to be
solved.

------
kalleboo
> While there are no really good alternatives to moving money domestically
> except via check

Does the U.S. really not have customer-to-customer wire transfers from regular
banks? I'm continually amazed by how terrible your banking system is.

~~~
aidenn0
They cost about $20 and some banks double-charge (i.e. charge the recipient as
well as the sender).

~~~
atvicar
The reason why Americans still use checks so often suddenly makes sense.

------
kybernetyk
Maybe I'm a little old fashioned here but I don't trust all those new private
payment processors (including paypal) with any significant amount of money.

I'm usually fine with using the services for < $200 but above that I'm using
wire transfer (within the EU) or checks. Yes, it takes longer (and in case of
checks costs me ~40 EUR to cash in) but at least I know that the entities
handling the transfer are registered banks and have refined their procedures
over decades.

I happily pay the extra charges or wait a few days longer for minimizing the
danger of getting into a kafkaesque verification loop comedy - or worse.

~~~
userulluipeste
"have refined their procedures over decades"

Yet it also (still) "takes longer"???

~~~
kybernetyk
Yes, it's not optimal. But still I feel more secure with banks than with the
next hot startup payment processor.

------
zaroth
You know you can just print a check with your partner's account number on it
and deposit it, right?

It's called 'Remotely Created Check' (RCC) and its as good as a check sent
through snail mail with an actual signature on it. You just put 'Signature on
File - This check has been authorized by your depositor' where the signature
line would go.

I wrote a little program to generate my own checks like this a few years ago.
I used to print them and take them to the ATM but since my bank added Check
Deposit to their iPhone app, I just take a picture of the check displayed on
my monitor. As a bonus, my signature is already in the back.

You'll need the OpenMICR font so your can print the MICR line, and it'll take
a bit of tweaking to get the alignment right. I was thinking of rewriting it
in HTML if anyone is interested... (client side only of course)

------
dkhenry
As a word of warning to those who would try Dwolla. Not only do they ask for
tons of information as many posters have mentioned, but they will not remove
your data if you close an account. If you read the Terms of Service Closely
they dictate they they will keep your data for a _minimum_ of three years and
possibly indefinitely. This includes your name, address, phone number, SSN,
and Drivers License. Think twice about how much you trust them before you fork
over information to a company that provides you with that kind of ultimatum.

~~~
jusben1369
There's a chance - given you were doing financial transactions with them -
that they have to keep that data around for a period of time.

~~~
dkhenry
There is, however even if you don't they still will keep it. Also as a bonus.
The same law which binds them to keep that information mandates they give you
privacy notifications, which Dwolla will not do, because they claim they are
not a financial institution.

------
jgoodwin
I have both bitcoin and dwolla, and between the two I've found Bitcoin much
more useful. Dwolla has a difficult business model these days, and I will be
sorry to see them fail. But they will fail.

------
siculars
Citibank and Chase both have money transfer services via email. QuickPay and
PopMoney, I believe. I have used both of them and they work. The sender needs
to have an account with the originating bank, either Chase or Citi but the
recipient can have an account anywhere with a routing number and account
number. The bank facilitating the transfer will ask for ACH access to your
receiving account and place some small transfers into your account. When you
see those transfers they are like activation codes which you then use to
validate that you are the owner of that account.

This certainly works in one off situations but I would love to see Citi or
Chase productize this via an API for authorized merchants, etc.

------
mutagen
I had some minor issues with Dwolla or at least my perception of how they work
that left a bad feeling for their brand and operations.

A buddy paid me money he owed me through Dwolla. I made the 'mistake' of
leaving it in the Dwolla account instead of pushing it on to my bank account.
A month later his bank was allowed to pull that back out because he had
overdrafted.

~~~
eridius
> A month later his bank was allowed to pull that back out because he had
> overdrafted.

How is that even possible?

~~~
alex_h
This is something about the US banking system that I find completely crazy.
Other banks/companies can 'pull' money from your account. Where I come from,
all bank transfers are 'push' as far as I'm aware. Ie. the sender of the money
has to specifically authorize an amount to be sent. In the US it appears that
in a lot of cases, the receiver of money can specify the amount they want to
receive and simply pull it from the senders account.

~~~
homosaur
ANY company can do this including your employer. A dogshit group of villans I
used to work for pulled money from an employee's bank account that had been
deposited from a paycheck because he took two weeks vacation to train for a
new job. Was it legal? Almost certainly not, but it happened.

~~~
jonknee
It's a pain, but setting up multiple accounts can help combat this (an account
to receive deposits before moving them somewhere else).

~~~
homosaur
After this happened to my friend, I set up my deposit account as a sort of
shell account where anything that enters gets transferred by the bank into a
separate account.

------
kenmck
Why is it that people think that they can open a payment account, transfer
thousands of dollars into it as their first transaction and no one will ask
any questions or be the least bit suspicious?

~~~
jusben1369
Yes I was kind of thinking of filing this under "the 1% problem". Who does
that much money first time around?

~~~
oijaf888
Businesses? Depending on the industry a $10K invoice isn't exactly huge.

------
WordSkill
It is true that Dwolla are not professional but it never was meant to be a
real business, it was always intended as a spotlight for Ben Milne.

Nothing wrong with that, ego has driven much of civilization but you certainly
should build Dwolla into actual business plans, it won't be around much
longer.

~~~
dasil003
You can't just drop a bomb like that all innocent and matter-of-factly like
that without further explanation. Smells like sour grapes.

------
yarou
I can understand this guy's frustration. While I've never used Dwolla before,
all the negative reviews of it make sure that I will never use it. Hopefully
Ripple and OpenCoin take off, in the meantime it's probably better to use
traditional methods of money transfer.

------
andyhmltn
This is why I'm eagerly waiting for Stripe to arrive in the UK (anyone have an
ETA?) For some reason every company that has a service like this seems to feel
the need to make you jump through a stupid amount of hoops. That wouldn't be
that bad if they were completely incompetent at it. Take PayPal: My account
was limited out of the blue. I provided them with all the information they
needed. 3 weeks later they asked for more. Then after providing that they
reopened my account. A further month later they closed it again and started
asking for the same stuff.

I understand the financial industry is extremely locked down, but I was hoping
itd be a little easier to accept payments now-a-days

------
loceng
I'm curious if others have had similar experiences.

~~~
zefhous
I've done about $120,000 of business through Dwolla with multiple parties and
I've not had or heard of any bad experiences whatsoever.

------
aneth4
Moving 5 figures of needed funds through Dwolla immediately after opening an
account. Come on - that's just pricelessly stupid, and I'm not surprised it
raised flags. The clown is the person who would do such a thing. And he
expects the funds to be available almost instantly. Send a few hundred or
thousands of dollars to test an entirely new payment method first, and to
establish that it works.

Anyone involved in technology should know - test before making a big
commitment.

Sorry, I don't give any demerits to Dwolla on this and neither should you.

I've used dwolla quite a bit, mostly for bitcoin, and it's been fine. As with
any place that handles your money, you need to establish a short record of
legitimate transactions and use it sensibly. Otherwise you are a "clown."

~~~
kfcm
He wasn't sending 5 figures; he was receiving it.

And why is he a clown for assuming his "verified with state and federal ids"
Dwolla account could receive such amounts, and he could get it?

It's a business account--5 figures is nothing. This may have been his test.

Getting in the way of business? I do give them demerits.

------
abawany
Their passive-aggressive credential demanding is nasty - I tried to create a
basic account and then the demands started. Calling them clowns is insulting -
to clowns. Dwolla: you are supposed to be upstanding midwestern folks: be G-D
UPFRONT about your requirements!

------
aleksandrm
Is there really no "good-guy" alternative to PayPal? Since PayPal froze my
account several years ago and robbed me of 2K, I have been in search of a
better alternative. First came WePay, I tried using it, but it was awkward and
slow, it took weeks to transfer a simple $500 in the U.S. between verified
accounts, and customer service wasn't all that helpful. Then came along
Dwolla, I haven't had any large transactions here yet, but it's been slow as
well, and unwilling to work with me and my buddy with whom we share a referral
credit -- not a very good beginning to start a relationship with a customer.
And now this article. Le sigh.

~~~
BoyWizard
The problem is, payment processing is _hard_. Fraud is a real problem, that
costs real money and takes a massive amount of effort to prevent. You can
limit your exposure (eg Stripe) by placing limitations on your solution (limit
by country, by transaction types, etc), but there is no fix for it.

Big banks don't do much better than Paypal in regards to fraud prevention, the
major difference is that they are regulated more tightly so they can't just
freeze your money without recourse.

------
at-fates-hands
>>>>>>"What I will not gladly do is let a bunch of folks who I have no idea
who they are other than a web site ever again reach into my bank account."

Maybe you should have thought about that before you decided to let them handle
so much of your money. To me, this is putting a LOT of faith in web site to
handle that much money right away on a brand new account.

~~~
viggity
wtf. they are a lot more than just a website. they're a front end on top of
"The Members Group" which IIRC is a financial services company for a ton of
banks. But to say that all they are is a website is pretty lame. Sorry you
couldn't move 5 figures of cash on hours after you create an account.

------
kylelibra
Nothing could be worse than PayPal, but this is alarming. Personally Stripe is
my go to payment method to use for clients.

~~~
jusben1369
Stripe is fantastic but 2.9% and 30 cents isn't trivial vs 25 cents if you're
trying to have a client pay you $5000 or $10,000. If Stripe nails ACH that
might be another thing.

------
mp99e99
Well, If its in the tens of thousands of dollars ($10,000) for a .25 cent
charge, this seems like alot of risk to handle in house. Ie at that size 1 in
40000 transactions could be fraud and they would be breaking even on the .25
cent charges, assuming there is no overhead to running this business.

------
xer0x
Me too. I was totally frustrated when trying to signup. I didn't have the
paper work they wanted, and so I had to use another service.

I understand that fraud is serious. However, I'm very disappointed that I
wasted a lot of time trying to signup with them too.

~~~
boling11
Out of curiosity, which other service did you end up using?

------
zefhous
What a poorly written and immature article! Calling Dwolla "a bunch of clowns"
because you couldn't get your account verified right away is just ridiculous.

It's also ridiculous to claim to "understand the whole fraud aspect" and then
imply that they are engaging in fraud because the money hasn't been
transferred back to the other guy's account within a single business day. And
claiming that Dwolla is too good to be true because it didn't work out for you
right away? Really you want us to take you seriously?

These things take time and these businesses cannot and should not be run
without adhering to processes and rules that aren't transparent to consumers.
As a payment processor, a false positive is much worse than a false negative.

Dwolla is providing a fantastic and much-needed service. In my experience the
people at Dwolla are providing a great service and doing a good job of it.
Their support has been responsive and very well done.

~~~
niggler
You didn't read the complaint.

'Currently, there's 10s of thousands of dollars that have been removed from my
business partner's account, that are sitting in Dwolla's accounts, that Dwolla
claims they will "return in due course."'

That should never happen. If there are fraud problems, they should be
clarified and settled before the fact, not while they hold onto the cash. The
sum is too large to take to small claims court and I imagine too large for the
author to just write off.

~~~
zefhous
I did read it, and I see no evidence that they are holding on to the cash.

Dwolla was trying to verify his information at _this morning_ at 11 am. His
business partner transferred money through Dwolla, so of course that's where
it is right now waiting to get passed through to him.

If Dwolla is actually holding on to the money and refusing to give it back,
then there's a story — but I don't see any evidence of that.

Like I said, these things take time. I believe this post was published about 3
hours after they called to verify the account — he tweeted about it at 2:06
PM.

------
christopheraden
I currently use Dwolla for transferring funds over to Mtgox. Given this
information, is there a better service for getting funds from a bank account
over to Mtgox without doing a wire transfer?

------
jokoon
Maybe the time you spent doing it the way you used to do was not in vain at
all. Security is not really something you can sell at a poor price.

If they can lower their prices, and if their business allows them to retain
your money, maybe they want to target clients who are 120% cristal clear
clean, because that's how most client are.

They're not bugged by that tiny percentage of people they prefer not to
validate because paranoia can rule you out easily. You had the bad luck of
having a bad smell even on all the paperwork you have them.

That's like calling brown people terrorists. That's not racist or mean. That's
just unfortunate. Sometime security is a real bitch. That's just pickup up the
pieces. That feels bad, but it's for a good cause.

~~~
eridius
I was with you right up until you tried to justify racial profiling. That's
not security, that's racism.

~~~
jokoon
Well security is something the US is having a lot of problems with.

------
jaksmit
Try Balancedpayments.com I think it does what you're looking for.

------
dbond
Do US banks not support direct transfers online or by phone?

~~~
wmf
Sure, for $30 each. Or you can use "bill pay" to have your bank mail a paper
check.

~~~
whynotbalu
This is not true, it obviously varies by bank. Bank of America allows free
online transfers to other B of A accounts, and it costs between $3 and $10 to
transfer to accounts outside the bank. The $3 option to transfer between banks
is pretty fast, while the free, inside bank option is instantaneous.

~~~
nmcfarl
As a counter point, in 2005, I had a BofA branch in New Mexico say I need a
business account to do a transfer to a BofA in Washington state - and
otherwise they’d do a wire transfer for $50. (When I was in Wa state
transferring to NM was free.)

It could be time has made things better - or it could be you live in one of
the better BofA fiefdoms...

~~~
whynotbalu
You do know it's 2013, correct? :)

~~~
nmcfarl
7 years is a very short time in the world of banks.

I personally would prefer to never have to change banks again in my life - and
since my banking has been near entirely online since the late '90s that has
seemed reasonable for almost 2 decades.

In fact Citibank closed down my account type/product, and required I go
through the whole rigmarole to set up a new account (vs just converting my
account). Wells Fargo, started requiring fingerprints to do any action with my
account. (Bad neighborhood - but depositing a check shouldn't require a
fingerprint. ) And BofA did the above when I was flying between Seattle and
Santa Fe every 3 weeks.

After BofA I switched to a local bank in Los Alamos (a town I've not been to
in 5 years at this point) and it's working out splendidly.

------
toast42
I use Dwolla to transfer less than $500 every month for splitting rent,
utilities, etc. I've never once had a problem, they're just kind of slow
sometimes.

------
riderofrinos
And surprisingly they don't have support for any kind of TOTP, like google
authenticator. Any decent financial site today should use TOTP.

------
userulluipeste
All the exposed material can help in a law court. How about suing them?

------
chourobin
Try Venmo?

~~~
boling11
Venmo has a $5k per week limit on payments as well as cashouts.

~~~
michaelfairley
Venmo now has payout business accounts: <https://venmo.com/payouts>

~~~
chmike
There is not much information on their sites. In what country does it operate
?

