Although it's an absolute joke I have found they only respond to formal legal threats. At one point they limited my account, with a couple of grand in it, in the same way (nothing in, nothing out, wait 180 days). So I sent them a letter basically saying "release my money or your staring down the barrel of a legal gun" and listed a whole load of lost earnings, recompense etc. I "would be seeking".
For the most part it was empty threats (I could probably have sued - but had no cash to do so) but someone actually rang me the day it arrived; never mentioned the letter but "a standard review of closed cases highlighted mine for reopening"...
It's more than just squeaky wheel syndrome -- PayPal is using the context of your communication to determine who you are.
Whether that's ethical or not is a separate question. But it seems logical to me.
So if I lost my "appeal" at PayPal, I would involve the real legal system, instead of their made up one.
(OTOH, if the OP got all his money back, then he was not necessarily wronged. Banks can refuse to do business with companies they are unsure about.)
And indeed, in the business world this happens all the time. Companies delay and defer payments to each other all the time trying to maximize profits. The situation usually comes to equilibrium without court action (e.g. "pay me for the last shipment or you won't get the next"), but it's really common. "Payment up front" is a consumer thing. B2B transactions are a whole lot more complicated.
That's not really worth it though.
Im smart enough [sic] to write a letter that sounds sufficiently legal and blustery for them to take notice. But taking real action costs a bomb...
I felt a bit silly doing it but it was one of those "oh ffs" moments - I couldn't face another month of getting nowhere :) If they had called my bluff I would have backed down and tried another tack; but it occurred to me at the time that it might work, and was at least worth trying as a shortcut.
I think that's in fact true. As in, their standard review of closed cases includes a clause that they should indulge in the face of legal threats in most cases.
But it does sound funny!
Apparently they were trying to do this here, but a bunch of emails wouldn't cut it. I can actually understand that.
However, there should be a channel for companies to pursue to expedite the process. If I were the Apparent Software, I would send a letter from an attorney- perhaps an affidavit- testifying to what I was trying to do. This would at least take PayPal off the legal hook for anything they are trying to do.
And it's a lesson for all of us. If we want to partner like this, we have to make it easy for our "silent" partners (PayPal, Google Checkout, Amazon-- they are all in the same boat here) to play along. I'm grateful to the blogger for posting: this problem wouldn't have occurred to me.
Surely, the 6 vendors won't point to a pirate selling web site, right? Also, we provided all their 6 paypal accounts. They could just call them to verify (which they apparently did when processing limitations of my partner's account).
But Google does the same thing. I have an issue with adwords that comes up over and over, and nobody there will give me a workaround.
If may also make a difference if you are working as a sole proprietor vs having a govt id # (EIN in the US). But this is wild speculation.
But my problem remains. I sell an educational software product, but I get lumped in with the "essay farms" that sell complete papers to students. So every time I change an ad... even just the price... I have to go through a lengthy review process.
I asked her to institute some sort of trust system-- with occasional spot-checks, of course, to allow my ads to come up in reasonable time. Even my grocery store has a payment trust system!
Still waiting for that system.
Factoring in anecdotal evidence like this (or mine) always has risks.
I'm sure you could find someone local who absolutely hates the bank you choose to have accounts with, but that doesn't necessarily mean you'll have issues.
I've been living in one for decades without any problems.
When does the plural of anecdote become data? At least, there will be a point where we've got enough data points to start taking precautions.
I have experienced my account having been frozen a few times, but in all but one case it was just a matter of uploading the required documents. The one case where this wasn’t enough was because an account had been frozen with the claim that I used it for “cash advance”, but the actual reason was something else, so I had to call them — they do have a number you can call with an actual human in the other end.
I have also sold to a lot of people via PayPal, and there is definitely a lot of fraud going on, as people have used stolen credit cards and hacked accounts more times than I’d thought to buy my product — so to some degree I do understand why PayPal are pretty strict. They are also under a lot of external regulation about anti money laundering and similar.
Something like this happened with a charity drive at SomethingAwful: http://www.somethingawful.com/d/news/paypal-fiasco-summary.p...
There's apparently no way to quickly talk to an intelligent person with the knowledge and authority to resolve a situation like this should one come up. It seems like with the fees they take out they could do a lot better.
But its quite easy to do once you know about it. With your biz paypal account call up and request activation of Daily Sweep. If the first person says they dont know what you mean keep asking, eventually someone will admit it (only took us 2 tries!) and set up the option. Now in your account activate it under your prefs.
Every day, the earnings will be Swept into your bank account, just like a Merchant Account. No guarantees they wont try to, say, pull money from your bank account tho...
Make no bones about it, banks take unauthorized withdrawals very seriously!
While the cost of processing payments is an issue (particularly with otherwise low cost software downloads) it is important to link your business to partners with a solid reputation for probity and good service.
If you want to get a more detailed view of the issues have a read of the interview Max Levchin gave to JL in Founders at Work.
Otherwise I'm entering my credit card number into their site and I have no way of knowing how good or crappy their security is. I'm basically having to trust them not to do something stupid like store it in their DB, or mail it plaintext to their order processing guy, or some other brain dead thing.
Good for the site too, in that a consumer's credit card information never touches your database; less liability in case of a data breach.
This is largely why we use a merchant account with a real bank (which has a dedicated account manager), and a gateway with quality support staff that always pick up the phone.
FirstDirect - are very good at that.
Do they? Because I've never met one that does.
(But my bank bounces every other payment to joker.com for the same reason. Amateurs.)
The basic problem is that if you're a low-margin Internet-scale transactional business, the marginal cost of distinguishing fraud from unusual non-fraud is higher than the marginal benefit from letting the transactions through. And if you're Paypal and you get the float on a bunch of locked funds without the need to following banking regulations, it's definitely not in your best interest to do.
ApparentSoft is a developer based in Israel, like me. They probably opted to use PayPal because PayPal recently opened up the ability to withdraw directly to an Israeli Bank account -- something which all the ohter entrants on this list cannot do (with the possible exception of 2CO, haven't looked at them).
I use them as a secondary account because some of my customers refuse to use PayPal, and 2CO really sucks compared to PayPal. They haven’t frozen my account, but their UI is crap, their fees are higher, there is delay before payment appears in my account, they keep a “reserve” when they do payouts, etc.
I've built merchant processor plugins for several different systems (2checkout, worldpay, alertpay) and NONE have as nice of an API as PayPal (both regular IPN and their PayPal Pro NVP API).
We've been selling through PayPal for 7 years now without issue, and we usually process from 2 to 3 hundred transactions per month.
I wonder if this is something of a best practice, to have two payment processors running live. Besides giving customers a choice, you also have the other one already up, running and accepting money if paypal or whoever freezes you.
I suspect they probably see much higher percentages of fraud than other payment processors, and as such have decided they'd rather shut down accounts and reverse payments without warning rather than actually trying to detect and prevent fraud in the first place.
I can. It had never been a hassle to me. If there are several payment options available I choose paypal—it knows my shipping address and saves me from filling the same borring form again.
I understand as much as the next guy that a company like PayPal needs to take fraud seriously. But why not work with your customers so that they can prove themselves to be legitimate businesses with legitimate intentions? I know I'd be more than happy to provide PayPal with whatever information they need in order to ensure uninterrupted service, and to prevent my account from being randomly "suspended" one day without notice or without reason.
They should get their act together and make quality customer care available for all of their Pro customers.
Maybe I got lucky -- I got an excellent account rep when signing up for the API. She gave me a direct number to her desk and whenever I have a problem I call her and she fixes it.
I actually sent an email to PayPal's Executive Customer Service department telling them how great she was and how there probably wouldn't be so many paypal horror stories if they had more reps like her... and they wrote back with a generic apology for the problems I'd encountered.
During one month where our sales were particularaly high they froze our account too, but not for incoming transactions, so no money was lost.
I called them on the phone and was able to speak to a representative in 5 minutes who sorted it out. Not exactly a horror story.
I've had a couple of charge backs and those irk me to no end. Paypal always sides with the purchaser because software is intangible. I've been tempted to mail out postcards with the license code on them so that I can claim I sent something tangible out, but it seems like too much of a hassle to be worth it (it really only happens about once per year). I ended up solving the charge back problem in a technical way anyway.
I have no complaints about them.
The problem is that MOST people have success stories, but it doesn't make for a very good blog post does it? One sentence nobody wants to read.
What PayPal did is pretty logical given the number of fraud they get everyday. e-mail has got no legal value and from the outside what they did wasn't very rigorous.
Email is absolutely of legal value.
My lawyers always told me the following: everything formal must be fax, snail mail or signed with an electronic certificate (I declare and pay my taxes with the later for example).
Copyright handover is not just "ok we're going to buy you 2 computers" kind of e-mail.
Sure, you should get them in writing and signed to cover your ass, but an email contract is still perfectly valid in most cases. Just like a "handshake agreement" can be legally binding.
"A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent."
edit: I've checked up a bit. There is such a thing as "oral contract" in French law but it's very strict and limited to certain transactions.
The legal definition of contract doesn't say if it must be written or not (http://www.legifrance.gouv.fr/affichCodeArticle.do?cidTexte=...).
It's extremely rare (read: never) to start a work without a signed fax or letter which basically says "ok, go ahead for that price".
That goes from a plumber who's going to fix your sink to me paying a designer to work on a web site. I guess in some cases an e-mail has got a valid proof, but it depends on the price of the transaction. You can confirm a 1,000 € job by e-mail, but I guess a 100,000 € transaction needs more.
What you need is a proof that the agreement occurred between the two entities.
When giving someone the right to sell your product, I'm quite certain than an oral agreement or even an e-mail is insufficient.
A printed e-mail sent by fax, let's just not talk about it. ;)
And when I faxed signed paperes nobody wanted to look at them. Although they said "go ahead" and send.
The real problem is that the support personnel are not the one making decisions, are not telling the same, and you can't talk to the people who really do decide.
Plus, their action of closing my ability to receive payment (and provide service to my customers) without any warning is an extremely aggressive sanction, for no reason.
Let's close his account and then see if he was doing legit business. In the mean time, "we're sorry for any inconvenience this may caused you". When you're doing a 2-week promotion, getting an account closed even for a week for "inspection" is not an option. After 2 weeks we were back to normal low activity, without the bundle.
You can offer paypal as an additional payment system, but really, work with your bank. You know the guy/girl there, and they care more about your business than paypal, because your good business means money in their vaults.
For certain types of contracts (especially regarding real property, like cars and houses) you need a written agreement.
France might have different rules.
The first time I had an incident was because of a sale I ran, and PayPal limited the account I got it fixed in a week, just in time for a sale of another product. This time, I emailes PayPal telling them about the previous story and asking if there would be a problem. There was, and my account got limited for a second time.
What I did then was, instead of submitting documents, I uploaded a screenshot of my email correspondence with PayPal, and their response. One or two days later, my account was free.
Processors are all powerful.
Consumers are always right.
Businesses are expendable . . .
despite providing the fundamental opportunity for the processors to exist.