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Paypal Horror Story 40k Frozen No Answers
404 points by sabslaurent 191 days ago | hide | past | web | 243 comments | favorite



Under U.S. federal law, PayPal is not a bank [1]. This is important. From the government's perspective, you give PayPal money and then PayPal gives you money. Between those events, it's not your money. PayPal has enormous discretion around what they can do with those funds, how and under what circumstances they get to decide to give it to you and if they get to keep it forever.

What state do you live in? Do you do business through an entity, e.g. an LLC? If so, where is it registered?

PayPal is, varyingly, registered as some form of a money transmitter in many states [2]. While your federal protections are probably limited to antifraud, protections you're probably outside of (PayPal has good lawyers--you agreed to surrender lots of privileges when you opened an account), there may be state regulations you can use to, if not force action, encourage it.

Going forward, I tend to consider any business using PayPal for mission critical processes as being negligent with important risks. If you can't avoid using PayPal for certain lines of business, set up a nightly sweep from PayPal to a proper bank account.

[1] http://www.zdnet.com/article/fdic-decides-paypals-no-bank/

[2] http://law.bepress.com/cgi/viewcontent.cgi?article=1153&cont...

Disclaimer: I am not a lawyer. Only a lawyer can give you good legal advice. Don't take legal advice from Internet comments.


"set up a nightly sweep from PayPal to a proper bank account"

That is by far the best advice one can get, and it's not hard to do.


This works, until they put 'temporary' holds on you. The holds seem reasonable at first (ID check, business verification, etc) - but can / will drag on for weeks / months.

All the while, the funds in your account add up - yet you can't touch them - and you have to deliver product to customers.

It can get very uncomfortable, very quickly. I thought I was safe with your advice, but still found myself recently with 6 figures held in a PP account.


I'll put it another way, if you are moving 6 figures of product, you can afford a less risky and... evil.. payment processor


The problem is that PayPal is probably the easiest and safest payment way for a costumer, so if you are running e.shop or other e. commerce business, you will lose a lot of costumers neglecting PayPal. I won't enter my credit card details on random sites I've found while googling for a certain product and won't buy from e.shops that don't accept PayPal.


I'm the opposite. I will never buy from you if you only offer paypal. I will take anything over paypal.


Why?


This thread offers good examples of what happens if you use paypal. Similar things have happened to me.

Even ignoring the fact that I don't like paypal's business practices, and I believe paypal as a service should not be needed at all, I cannot ignore the fact that if I use paypal, I will lose access to my money and I won't be able to do anything about it. Even when using paypal purely as a proxy for buying stuff (with no money in the paypal account itself), I've had accounts locked for no particular reason (with payments denied to the seller, but me losing the money), which meant I didn't get my product and precluded me from doing business with the same seller in the future.

Paypal is a huge liability. Fortunately, it can be avoided for almost anything that matters, sans Ebay.

Sometimes I need some obsolete, unique product that is available on both Ebay and Amazon (3rd party seller), but it's more expensive on Amazon. I buy it from Amazon each time just to avoid Ebay.


That's a very good point.


I'm not the previous commenter but I'm the same. It's because according to everything I heard about paypal if I put money in a paypal account it's a PITA to bring it back to my bank account so I need to spend it.


PayPal provides the means to pay with a credit/debit card without having to have or create a PayPal account.

That said, they do not make it prominent and I often have to explain to my users how to find it.


A lot of people refuse to buy with anything other than paypal. I don't sell things online very often, but I do regularly buy things from ebay. Here's the way I look at it.

Paypal has historically sided with the customer close to 100% of the time, mostly because they are not a bank and therefore are pretty much powerless when a customer issues a chargeback. That's why fraud is rampant. If its trivial for an unethical person to steal things on a regular basis using paypal, because sellers have no reliable form of recourse, I can be pretty certain that as an actual honest buyer I'll practically never have to worry about getting screwed over by a seller.


Aren't they still by far the cheapest if your business relies on micro transactions?

I remember Marco Arment commenting on this.


Until they take all your money, at which point they become the most expensive.


What are the other processors that reasonably price micropaymens? PayPal has ¢5+5% micropaymens regime.


A normal payment processor (which you can integrate with PayPal) can beat 5% plus 5 cents.


Shard it out and have several accounts. If you do that much business, set up accounts/companies for subsectors of what you are selling.


Stop taking payments via paypal while they hold up your account? Tell your customers ahead of time that paypal payments are slower and shipping may take longer if they choose to pay via paypal? As long as you have other options for your customers, they should be informed of the risks and limitations of the payment method they choose.


but thats the thing...if you start seeing those checks "paypal red flags", immediately switch to a different merchant or payment system.


But they can withdraw from linked accounts as easily as they deposit to them. You give them permission to do so, even for disputed amounts, in the TOS.

The only safe mechanism is to close them off from the bank side (e.g. sever their access, close account, change account number).


I think you are misunderstanding the point of a sweep account here.

Paypal gets "swept" into the sweep account at your bank, and then that account gets "swept" into another account at your bank that paypal does not have access to.

Your sweep account should get a very low balance, and only acts a sortof public-facing proxy for your bank accounts.


No, I didn't misunderstand the quote:

"set up a nightly sweep from PayPal to a proper bank account"

In other words, there is no mention there of any second bank account as a final depository... which is, of course, the best mechanism.


A "sweep account" is a technical term and has a specific definition. The parent's comment makes absolute sense if you know what sweep accounts are used for in the more traditional sense. The parent is suggesting setting up a 0 balance sweep account and then having paypal deposit all funds into that account nightly.


The original comment didn't even use the term "sweep account".


[flagged]


These comments are hillarious. Literally the first result for nightly sweep:

https://www.google.com/search?q=nightly+sweep&oq=nightly+swe...


exactly


So, how does one set this up in the automated way?


Paypal has this as a feature. It's buried but you should be able to find it. It's called Auto Sweep.


Apparently you have to contact them if you don't see the link after clicking More> by your balance. (3/12)


Or, as with any website without Api, you can use tools like Selenium or Kantu that automate a system via its web interface.


Paypal is a licensed money transmitter, and they are required to follow those rules. They can't just keep your money.

The money can be frozen for up to 180 days.. which is exactly the same as every merchant account I've ever seen.

If PayPal decides the money isn't yours, it goes back to who sent it. It doesn't become Paypals property.


PayPal wears many hats. During transit, you are correct.

If you're holding funds "in reserve" or otherwise "on deposit" with them, however, the rules are more flexible. For example, if they aren't certain you comply with their internal AML policy, they may have the power to indefinitely hold your funds. If they aren't certain you comply with their internal antifraud policy, they may have the power to indefinitely hold your funds. They may also be able to assess various fees, charges, et cetera against your "balances", whether free or restricted. I say "may" because this varies jurisdiction to jurisdiction.


Paypals user agreement limits fund holds to 180 days.

If they hold your funds after that, that's breach of contract. Time to contact state agencies and/or go to court.


> Paypals user agreement limits fund holds to 180 days

Search for the word "notwithstanding". It usually comes in the form "notwithstanding anything to the contrary in the rest of this agreement..." Remember that PayPal incorporates--and reserves the unilateral right to change--several policy documents into its agreements.

These agreements are necessarily complicated. They're also drafted by counsel working for PayPal. At least in the case of AML, I'm reasonably certain PayPal has to, under federal law, hold funds when it suspects money laundering. Unlike banks, which have their AML policies and definitions reviewed, PayPal is relatively free in constructing this policy.


Did you do your own search? Because "notwithstanding" only occurs twice in PayPal's agreements: one for the right to display your trademark; and another for arbitration.

PayPal's agreement requires 30 days notice of any changes, and they post the changes on their website: https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-f...

Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow. The funds frozen for AML don't become paypal's -- they're seized by the government.


> Paypal's anti-money laundering rules comply with the rules set by each state that money transmitters are required to follow

It is complicated. For example, New York's Department of Financial Services "interposed no objection to PayPal offering certain of its payment processing services to New York customers without being licensed as a money transmitter" in 2002 [1]. These rules are complex alone, complex in their interrelations and subject to competing regulatory interests.

I work in a regulated financial forum. I've seen, or been relayed through regulators, accounts concerning money transmitters needing to hold funds for more than 180 days to finish an investigation per their internal policy. At that point, the contract doesn't matter--statute trumps. This might be unique to New York, but I doubt we're the only state or territory with these rules (usually, our laws are the most cutting).

If it's customer versus compliance, the customer almost always has to engage regulators or sue to make progress. When using money transmitters like PayPal to not only move funds but also hold them you're giving up a lot of the regulatory protection and venue-provisioning you get with more sophisticated services. If a business relies on PayPal, its management needs to talk to a lawyer and do more research.

[1] http://www.dfs.ny.gov/legal/interpret/lo020603.htm


yes, I agree with everything you've written here, except one thing:

NY may have been ok with paypal operating that way in 2002, but that has clearly changed:

https://www.paypalobjects.com/webstatic/en_US/licenses/NY_li...


Can you go directly to court, or is there an arbitration process in the way, first? What does the current TOS say?


An End User License Agreement only holds when it is in the best interests of the company issuing it and never at any other time. I'm pretty sure that's in there somewhere. Looking at those jokes as an actual contract is laughable.


They can do whatever they want with your money while, as you mention down thread, you contact authorities or take them to court.

They probably won't do anything particularly nefarious as far as the law is concerned, but that doesn't prevent this situation from becoming an unmitigated disaster for the small business owner who doesn't have their own floor of lawyers.


Nothing in his post suggests PayPal has violated their agreements.

In fact, nothing here would be out of line for any merchant account (except maybe the customer service issues).

2% chargeback rate is extremely high. It would get you shutdown pretty much everywhere. MSP agreements usually say between 0.25% to 1% for the chargeback rate limit. This is 10x what i've seen some banks specify as an acceptable chargeback rate.

And if you exceed it.. you get warnings, reserve lines and longer holding periods, and eventually the termination of your account. Exactly what happened to OP.

Each one of those actions should have been a red flag to the merchant tellling them they have a serious problem they need to address.


Sorry for the delayed reply, HN wasn't letting me comment. You don't seem to understand that Paypal agreed to my 2% chargeback rate, in fact they came up with the $5000 set reserve + 10% rolling reserve in order to let me run. Not once did Paypal tell me I'm at risk of losing my account or getting my funds frozen for 6 months. I have had 0 warnings. The issue here is bigger than that, it's the inconsistency in what they request, it's Paypal requesting information but not letting me provide it, it's Paypal's inner departments not speaking to each other and every time you call in you get different information. When I log into my account it still says it's limited because Paypal needs more information regarding recent sales, but guess what, they don't tell you which information they need or how to provide it. Paypal was aware of my high dispute rate and agreed to work with me based on the reserve they wanted which I accepted. Not once did I receive a warning contrarily to what you may think.


I hear from my MSP all the time about security improvements that need to be made, changes to visa/etc networks, rate changes, etc.

The number of times I've had an MSP call me to discuss fraud in the past 14 years I've had one or more merchant accounts: 0

The number of times I've had an MSP establish a reserve line for my account: 0

The chargeback rate for an ecommerce site I've run for 14 years: 0.1% (about 1 every 1000 orders)

MSPs don't normally contact their customers to discuss fraud. They don't normally require reserves.

Every time they contacted you about the chargeback rate was a warning. When they set the reserve line that was a warning. You didn't negotiate the right to the chargeback rate.. you negotiated how severely their anti-fraud control would impact your business.

These were HUGE red flags. Possibly the biggest red flags you could have gotten, short of a legal notice or the immediate closure of the account.

And while it sounds like PayPal should have been more direct with you about the consequences here... I can tell you that every MSP agreement I've ever seen specially talks about these actions as negative actions they may take to mitigate the risk of fraud.


0.0001% (about 1 every 1000 orders)

1 in 1000 is 0.1%


thank you.. my brain has clearly failed me.


If you click on the link that says "x minutes ago" you'll get a reply option. Or it might have to do with your account being new.


That’s true for the US, but in Europe PayPal is officially a Luxembourgeois bank.

In this case OP seems to be Canadian though so I guess he’s dealing with the US entity.


The EU bank status might explain why Paypal e-mails me each month to remind me that I have money in my account; it's only a penny, but I don't remember such notifications back in the early 2000s when they were only a California-based company.


They even send you that monthly reminder when you haven't touched your Paypal account for months. It's basically advertisement you can't turn off.


It will be interesting to see what happens with them in the UK after brexit.


It's quite plausible that brexit won't/couldn't change anything - depending on how exactly brexit is handled, UK may stay as a part of the relevant treaties so the licencing of financial institutions across EU/UK border will stay the same.


Probably getting a e-money license in the UK as they are easy to get.


When you give money to a bank, it's no longer yours. It's registered on the bank's books as its own asset, offset against a liability to pay the money back when you ask for it. If the bank goes under, you're just another creditor.


> When you give money to a bank, it's no longer yours

The cash is no longer yours, but the "money" certainly is. It's just taking the form of a demand deposit at a depository institution. We can quibble about the definition of "money". By the Federal Reserve's definition (and the bulk of international and American case law), bank deposits are your money [1]. Claims against money transmitters aren't even M2.

> If the bank goes under, you're just another creditor

If the bank goes under, you're a super-senior creditor partially or fully insured by the FDIC. PayPal, itself, isn't FDIC insured [2].

> if the bank suspects you're a human trafficker or a money launderer, they will freeze your money even if they can pay you back

If a bank freezes your funds, you have regulatory recourse to ensure they're doing it per the law. If a money transmitter does this, you need to pay for your own lawyers and enforcement.

[1] https://www.federalreserve.gov/faqs/money_12845.htm

[2] http://money.howstuffworks.com/paypal7.htm


PayPal doesn't need FDIC insurance because it's not in the money lending business. In fact, to my knowledge, PayPal had no trouble weathering the financial meltdown of 2007, whereas many regulated banks went under and had to be bailed out.


FDIC insurance is not only for financial meltdowns and saving customers money out of assets that deemed to be too risky. It would protect money if the whole PayPal would go down too. Which realistically probably wouldn't happen, but still insurance is insurance


PayPal does offer business line of credit. I see the damn interstitial ad every sign in


Is it definitely from PayPal? I have a credit line in the PayPal interface but it's actually from some other company.


"While your federal protections are probably limited to antifraud..."

Thank god I am German, all that trouble is not my problem. If Paypal owes me, I can sue them. Simple as that.


An update for anyone who cares...I tweeted this link and tagged Paypal, they reached out saying they are sorry to hear and submitted my case for a review. I replied via DM how can they review ny case without asking any new information or telling me what the issue is, got no reply back. Just got an email saying "Appeal Denied" Paypal account closed for security reasons.

Which security reasons I have absolutely no idea. There's no contact info on the email, just says it's a do not reply address.


Wow. What next?


No idea, clearly they aren't paying attention to anything I say and just send automated replies. No one to talk to, nothing to do. I'm assuming complaints with different organizations to see if they can help.


I'd say keep the battle public. The more bad press they seem to have as it drags on, the more likely they'll do something about it.


I learned this lesson years ago when I was 12 and selling some software online. Paypal for no reason froze my account which still had 300$ in it (which is a ton of money at that age!). All appeal attempts failed, and they just didn't give a shit. I vowed never to ever do anything related to Paypal again (hence I don't use ebay). They're a scumbag company.


Traditional customer service channels are increasingly broken since they are seen as a cost center to be reduced by many companies. In particular, if you are trying to cancel service or withdraw money it is even "worse" because not only do they have to pay the salary for the rep, they also lose money helping you.

If after one or two calls you don't get what you want, it is not worth retrying. I gave up after being placed in queue for an hour with Comcast. After finally getting ready to speak to a rep, I was informed by an automated message that they were closed for the day and to call back tomorrow.

Here is what I find works: 1) Least likely - Traditional customer support channel. Try once or twice at most. 2) More likely - Contact publicly on social media like Twitter (Comcast is actual great about this). 3) Most likely - Getting upvoted and written about here and elsewhere.

I would wait to engage with a lawyer as there is a good chance that someone from Paypal will popup in this thread. It is probably already surfacing in some internal emails at Paypal now. Good luck.


What worked for me with Comcast was ultimately filing an FCC complaint, at which point someone from their executive customer relations team was assigned to me and was actually very responsive. It's just a shame I had to file an official complaint before getting decent support.


It is more than jusy cost. Many decisions seem like customer service but in fact are legal matters. Releasing funds isnt like reseting a password or reconnecting a telephone service. For those decisions that legally bind a company or that may violate various regs one often has to get management approval. Something as small as releasing a few hundred dollars, if that money is held due to a red flag, might even require board approval or at least be reportable to shareholders. It is silly that our laws dont have perspective, that a 100$ prize to the author of a story about syria is subject to the same rules as a 400k payment to a shadowy syrian bank operating out of a russian flat, but blame the people writing the laws.

Or, dont treat or trust paypal like they were a bank. The OP seems to be canadian. Canadian banks have a stellar rep. Trust them, not some US money-moving website.


I make invoicing software that I sell using PayPal and it lets my users add a "Pay with PayPal" button to their invoices and over the years several of my clients have called me and related stories similar to this and they all had some common traits.

They all processed quite a bit of money via PayPal and they all had issues with customer's requesting refunds which they disputed or didn't issue in a timely manner, and they all sold something which had the potential to be a bit shady. One of them sold aircraft parts to Iran, which may have had some legal restrictions that applied. Another sold guns.

Since I sell access to web based software I don't have to ship anything and the product is "delivered" instantly. I also process refunds immediately and without any question.

PayPal most certainly doesn't like getting caught up in refund issues. In my case most of the customers who've requested a refund contacted me first and I issued it promptly with a "Thanks for trying my software" note attached.

The few that have contacted PayPal first resulted in PayPal sending me a notice about the request for a refund and, again, I issued it immediately, but their notice makes it clear that is what they expect and if I recall correctly they put a time limit on that.

Take from this what you want but what I've taken from it is when a customer requests a refund issue the refund as quickly as possible and try hard to make that as easy as possible for your customers and to minimize the potential for them asking for one.


There's all sorts of other ways PayPal can decide to hold your funds as well.

For example, they have a really simplistic implementation of OFAC regulatory compliance. Make a transaction that has the right strings in it, even in a comment, and it gets your whole account frozen. And some of these magic strings are very common names. Such that if someone named John Smith ends up on the OFAC list, any transaction with that string in it, anywhere, triggers chaos.

That's just one additional way they can choose to freeze funds. Many others exist.


  Since I sell access to web based software I don't have to ship anything and the product is "delivered" instantly.
Since your "delivery" is not a discrete item and tracked by a common carrier they recognize (e.g. USPS, UPS, DHL, etc.), you also have zero protection from chargebacks. They won't even investigate beyond just taking back your money plus a fee.


That may be. I've not worried about it though because they do notify you and let you know there's been a request for a refund.


PayPal won't accept a charge back from a user until the user has contacted the merchant first. So user complaint? issue a refund.


Not true at all. If a chargeback is filed with the card issuer first, Paypal takes the money directly from your account immediately, pending "investigation". I've personally experienced this several times (I have well over 10,000 transactions with Paypal).


> One of them sold aircraft parts to Iran, which may have had some legal restrictions that applied.

Shady is an understatement.

In the EU countries I do business with, that falls under sensitive hardware being send to a sensitive country.

Not only do you need to get extensive approval from the national-export-agency-thing, but it's also special goods that's likely to be used for military purpose, thus you are required to contact the feds on your own initiative to disclose the full details of the order and the clients and get yet another level of approval and background checks.

By "just sending the goods" you are in a very serious breach of regulations. Don't be surprised when your shipment is stopped at the border and the payments are frozen, because that's 100% guaranteed to happen if you get a control.

Even if you try to get away with it. The intermediate providers like the shipping company and the payment provider still have to follow the law and they take it seriously.


> By not complying and "just sending the goods", you are in a very serious breach of regulations. Don't be surprised when your shipment is stopped at the border and the payments are frozen.

That would be the good outcome.


I very recently (as in this was resolved about 72 hrs ago) was in a a similar situation where I had $20k withheld by PayPal.

I would switch all of my business billing to stripe in a second if they had the ability to pay out to accounts in different currencies like I can do with PayPal.

Despite the fact that I run an Australian business I usually bill in USD but because I travel so much sometimes I'd like to have it in EUR or GBP etc for practical purposes. However with Stripe I am forced to convert it into AUD before I can do anything at all with it meaning I usually have to eat currency conversion fees twice before I can use it in a practical sense. Hence PayPal sadly....


We're pretty much in the same boat, except we picked Stripe anyway. We're eating the conversion fees, can't wait for when they can start paying out in different currencies, but at least we're not getting into any more PayPal horror stories. :-)


Yes, Stripe is better, just "tack on" the small % to your sales prices to cover the currency conversion fees . . .


So this can't happen with Stripe? You are delusional.


Of course it can happen, but I've seen 0 Stripe horror stories, but many, many, many PayPal horror stories over the years. So far their track record is very good.


Compare the scale. Stripe horror stories will come.


You should be able to get a USD bank account in AU, then receive your payments from stripe without any conversion.


As far as I know that isn't an option either.

Stripe only pays out in the same currency of the country the account is setup in. Rumours are this is changing, if anyone from Stripe reads this and is looking for beta testers please get in touch (contact details in profile)


I think this depends on the country your account is setup in. Some countries allows you to have bank accounts in alternative currencies:

https://support.stripe.com/questions/which-currencies-does-s...


That list is a bit misleading. In most countries, you can add a bank account in USD, but that bank account must be in the US.


I'm pretty sure we're being paid in USD to a USD account based in Australia with Stripe payments for FastMail.

(we also use Paypal and a couple of other providers - spreading billing between multiple providers is a good thing)


No, Stripe doesn't support this unfortunately. Pin does though (an Australian Stripe competitor).


I'm sorry but why do you think you know more about this guys' experience than him? This is like when I'd get calls from a delivery driver telling me I didn't know my own address... Plenty of companies will do custom setups for big clients.


nmjenkins and brongondwana are both directors of FastMail.


IIRC this is not the first time this kind of bad behaviour has been reported about Paypal. I suppose you were aware of that. Did you consider Paypal's reputation when you chose to do business with them? Were there alternatives that you considered at the time and if so, why did you stick with Paypal?


Depending on where, what and how you're selling, offering PayPal is pretty much mandatory due to customer expectations.


That wisdom is past it's use-by date.

Paypal no longer allows users to make credit card payments without an account[1]. Prior to this, paypal gave you access to an audience of anyone with a credit card. Now that they don't, your low-friction audience is restricted to people with actively used paypal accounts, which is pretty much 15-30 year old guys, and no one else. If you know anything about online sales, you'll know that any increased friction at checkout is a bad thing. Requiring people to make a paypal account at checkout time is probably dropping 20% of all customers and 70% of customers over 50. If you wanted to know why physical shops still exist, that's why.

You get a vastly wider reach with plain old Visa/Mastercard support, because anyone with a credit card can use it, no signup required. All adults have at least a Visa Electron (or regional equivalent), even if they don't have a real credit card, because that's what banks give out by default these days. Hell, most children will have them.

Normal credit card support is fine.

[1] By default at least. Paypals documentation[2] states this is still possible, but I haven't seen it work on any paypal shop for around a year, so either it's broken and they don't care or maybe no one reads the docs?

[2] https://www.paypal.com/us/webapps/mpp/account-optional


> Paypal no longer allows users to make credit card payments without an account

> Paypals documentation[2] states this is still possible, but I haven't seen it work on any paypal shop for around a year, so either it's broken and they don't care or maybe no one reads the docs?

From the last time I had to evaluate PayPal as an option, I seem to recall that they only allow people to make payments without an account a certain number of times. So if you have already made a payment through PayPal without a registered account a few times, you will be forced to create an account for any future payments. You've probably made enough payments that you've gone over the limit. I can't remember what the limit is, but I remember being surprised at how low it was.


I did it a couple of days back, so it still works. I have a paypal account for business, but not personal shopping. So I always use paypal simply as a payment processor for personal items.


We use use normal credit card processing through stripe and support paypal as well (as well as a few other options).

40% of payments are still made through paypal.

How many of those customers would have aborted if we didn't support paypal? I don't know, but I'm sure it's a non-zero number.


At least from Italy I'm still able to use PayPal without an account, FYI


Same from France and UK.


I very recently bought a watch online from a private seller and paid through Paypal without an account. So this appears to still work?


I don't see anything PayPal offers that Stripe can't do better. Why put yourself at risk of arbitrary catastrophe at the hands of a company like PayPal that wants to act like a bank while weaseling around the legal protections against bank malfeasance?


A major difference is that customers can pay through PayPal from a PayPal balance whether they have a credit card or not.

People use PayPal from person to person for B/S/T forums. The PayPal user base is bigger in this community because anyone can accept payments without being a merchant, yet unlike dealing over Venmo there are still protections for the buyer.

Also, accepting payments worldwide is much more feasible. Stripe is in 25 countries [1]; PayPal is in 200 [2].

[1]: https://stripe.com/global

[2]: https://www.paypal.com/us/webapps/mpp/country-worldwide


>A major difference is that customers can pay through PayPal from a PayPal balance whether they have a credit card or not.

Customers can pay through Visa whether they have a credit card or not:

https://en.wikipedia.org/wiki/Visa_Electron

https://en.wikipedia.org/wiki/Visa_Debit

As far as I can tell it might be only USA banks that don't issue these kinds of cards as standard, in place of a bank card.


You're right — to clarify, I was trying to make the point that one can pay via PayPal with their PayPal account balance, as opposed to via any type of card (credit, debit, ATM, prepaid Visa gift card, etc). So, one can use PayPal without a credit or debit card. Stripe does not offer anything analogous to that.

I'm not sure about other countries but in the US, it is possible to open a bank account without a debit card attached to it.


And you can get cash into paypal without a bank account at all.

For instance, https://www.paypal-cash.com/index.html


In Austria you can't really get these debit cards, and my understanding is that it's pretty difficult to get them in Germany as well.

People here get useless Maestro debit cards. You can only get Visa/Mastercard credit cards. And very few people do, usually only people who travel to the US bother.


Those cards are pretty standard in America too. If you open a checking account, you'll almost certainly get a Visa or Mastercard credit/debit card.


At least in Sweden, the youth cards are usually completely blocked from online transactions.


Stripe can accept payments from anywhere. The merchant has to be located in one of those countries (or have a bank account there).

Not having a credit card is the main reason I see for people requesting PayPal (they may also prefer it if they already have an account, but that's not a deal breaker).


Outside of the US and Canada credit cards are not as widespread as they need to be to base your business solely on Stripe.


It would be interesting to see where in the world PayPal is big. In most parts of Europe, PayPal is pretty much unheard of, because our banks don't suck, so PayPal never offered any improvements over just regular bank transfers.


>In most parts of Europe, PayPal is pretty much unheard of

Thats depends a lot on the country though. Not accepting PayPal in Germany would probably be the same as not accepting credit card in the US. In the UK however only offering credit cards might work.


Really..? I thought PayPal was extremely popular everywhere in Europe


In Scandinavia, the only people who know what PayPal is are the ones who maybe bought something over eBay, or the ones wanting to send money to a friend in the US, and being completely surprised by how hard that turns out to be.

There's 0 domestic use cases for PayPal there. Other parts of Europe I'm not so sure about.


Really? Odd.

Good to know, though.


For me, the advantage of PayPal is that I don't need to host my own web server (at home or in the cloud) and maintain code in order to take credit card payments. I realize it's just programming, but it's programming that I don't trust myself to do in a way that's reliable and secure.

Also, PP makes my accounting extremely easy. I use my PP debit card for all of my business purchases, so I just download a CSV of the entire year's transactions, and compute my results in a spreadsheet, for my taxes.

Given the horror stories, I realize it's a risk, and I periodically go out and look for alternatives. Best case would be to have two options for customers, so my business could at least take orders even if one of the two goes down.


You could use a business bank account with an associated debit card. Continue accepting PayPal but only use it as a processor and transfer funds to your business account regularly. This also makes it easier to have multiple payment methods, like if you want to test Stripe. It's a little bit more work but it's probably worth it. Oh, and most banks let you download some sort of spreadsheet for accounting.


Stripe doesn't support (most) parts of the world.


It's not always about features. Plenty of international vendors only accept PayPal transfers. It's then our discretion to not do business with those vendors but there's the rub.


Shopify doesn't allow Stripe, they force you to use Shopify Payments which I have no interest in using, they set their own rules and guidelines that I do not approve of.


Shopify Payments is Stripe on the back end though, what rules do they put on top?


For one, Payouts are 7-days in arrear where as with Paypal it's instant. Second, Shopify just started with this processing thing and they are amateurs at it, support has been horrible and they also keep changing their rules and requirements since this is all new to them. The shopify payments team also does not get on the phone, just email, i try and stay away from companies that do that. The irony is paypal just did it to me...


I'd like to hear more specifics. It's hard for me to fathom a market where using a shady outfit like PayPal would be "mandatory" - unless the market itself is shady.


Ever hear of EBay? The whole thing is shady, and PayPal is a defacto requirement.


Yes it is. But I assume the OP wasn't talking about eBay.


Paypal prides itself on being the safest payment solution online, they have easy integrations with Shopify. I don't breach their terms or perform any fraud so had no reason to suspect I'd be treated like a criminal and given inconsistency and lies by a multi billion dollar corporation I've paid thousands of dollars in fees too!


The fact that PayPal claims to be the safest payment solution is pretty irrelevant, especially if it's meant to be safest for the buyers and you're the seller. This is not the first story of PayPal freezing accounts with substantial amounts of money and not talking to the account owner.

Also, their ToS are pretty clear that they can do whatever they want, based on their beliefs, and there are no explicit limits how long they can keep your funds, or even obligations to talk to you. It might work differently in the EU, where they are registered as a bank (and so are regulated as a bank), but in US that's not the case IIRC.

The behavior is not all that unexpected - it's easier and cheaper to loose a customer receiving a lot of complaints than to inspect each of the complaints. So while I understand this is pretty damaging and dislike what PayPal does, I'm surprised that people are surprised.


Corporations still manage to maintain the illusion of decency and customer service. Their real behavior is surprising to a) people who were lucky and have never encountered it and b) people who suffer from some corporate equivalent of Gell-Mann amnesia.

I belong to the second category. Also, it becomes harder to avoid such companies at all, for example cell phone operators in Europe universally view their "customers" as billable addresses; some find it cheaper to settle billing disputes in court (and lose a great percentage of the cases) than to maintain a "customer" service.

With mobile the solution is to go prepaid.


Corporations still manage to maintain the illusion of decency and customer service

I'm baffled by this. Paypal does not. 28 days ago I wrote this comment on HN: https://news.ycombinator.com/item?id=13624393. I'm sure that in the future I'll be reading another Paypal horror story from someone like you, who somehow thought, "It won't happen to me!"


Same here. Most people tend to downplay risks "because they're big", but there are alternatives and it's worth missing a few opportunities for a lower risk.

E.g., I don't go to USA conferences because of the TSA risk, people find it funny, yet I keep hearing horror story after horror story. For Paypal, though, people take the risk unknowingly because they aren't aware of Paypal's reputation, which is more understandable.


Well, people don't realize a lot of the bad stuff actually makes business sense. It's not that the companies are meant to be evil, but once you are a customer, they have little to gain from treating you as well as potential customers.

For example, once you subscribe to a cable TV / cell phone operator / whatever, they'll keep you on that subscription until the contract ends, even if new customers can sign up for half the price. And even then it's a matter of how much you spend with them and if it's worth negotiating a better contract.

This has little to do with the corporations being intentionally 'evil', it's more about insufficient competition or even monopoly (how many cable TV operators / ISPs are in your area?). We have multiple cell phone operators over here, but they have little incentive to compete - the number of people leaving/joining each operator is about the same, and if one operator decreases the prices the others will do the same, eliminating any advantage.


>Paypal prides itself on being the safest payment solution online

Sure, and bottom-shelf plastic-bottle vodka says "PREMIUM QUALITY" on the label


Paypal also has a reputation for unpredictability and politically-motivated action against users. The rise of cryptocurrencies in recent years was largely a result of how paypal and credit card companies reacted to US government "requests" (ie the blacklisting of wikileaks and vpn providers). Nobody can stop or confiscate a bitcoin transaction.

Given the regs that paypal thinks it must abide, specifically the many vague US antiterror rules, anyone getting into bed with them runs massive risk. The internet is full of stories exactly like this. The only hope is to rally enough of social media, or a tv show, that a human being at paypal takes pitty in you.


That isn't really an answer to the question OP was raising, although I do sympathise with you. Having said that, Paypal is known to be very evil, and because of this I do expect people whom are still using Paypal consider this behaviour a calculated risk, rather than a surprise.


'who', not 'whom'


Thanks -- as an ESL'er, this is one of the more tricky aspects of the language to me.


The company has been successfully sued over "improper account holds" (See Zepeda v. PayPal) and the internet is utterly jam packed full of stories like yours. I don't see why people find it surprising at this point.


Can you think of many payment processors that would tolerate an ongoing 2% chargeback rate?


Of course, many do in fact. Despite that, Paypal saw my high-dispute rate and worked out a plan where they will have a set reserve of $5000 + a 10% rolling reserve in order to mitigate risk and work with me. They then called me on 3 separate occasions to ask questions and see how the business was going, not once did they say my dispute rate is too high for them or that I'm at risk of losing my account. They just randomly gave me the hammer one day and use automated emails to circumvent any request I may have. They are inconsistent, rude, lying and simply provide 0 customer service while holding my money simply because their "system" said so!


>Of course, many do in fact.

No mainstream cc merchant account bank and payment processor will accept 1%+ chargebacks.

That type of account is categorized as "high risk" and you have to resort to processors that specialize in that area (e.g. adult, gambling, etc). One example says they can handle up to 3% chargebacks.[1] They will definitely make you pay for that privilege in multiple ways: higher setup fees, higher monthly service fees, higher transaction fees, higher reserve, longer hold times before releasing funds to you, etc.

I'm frankly astounded that PayPal was willing to let a 2% chargeback go on as long as you said they did. All my previous reading about PayPal's contentious relationship with VISA/MC network & member banks was that they do not want to be associated with "high risk" accounts.

[1] https://www.emerchantbroker.com/blog/need-a-payment-processo...


Totally agree, high risk processors who charge 15%+ on top of interchange exist.

Those competing against PayPal? Not so much.


>Of course, many do in fact.

Which?


2% dispute rate?! That would get you shut down at every merchant account provider I've ever dealt with. In fact, it's usually 0.5% or 1% max. One major bank gave me 0.25% max. I've never seen an agreement that said 2% was ok.

That's a very serious fraud problem.

I've run an ecommerce store -- the chargeback rate was 0.1% (seriously, I calculated this from actual #s).

Nothing in this story (except maybe the customer service issues) would be out of the ordinary for any merchant account.

Edit: fixed chargeback rate


Not sure what kind of volume you were doing to get that chargeback rate. I was doing 500 sales a day, approximately $250k a month in volume when I was running, my dispute rate was high but chargebacks lost were minimal. Despite that, Paypal were aware of my dispute rate when they negotiated the terms of our agreement ($5000 set reserve + 10% rolling reserve) - they then woke up one day and closed my account without letting my appeal or negotiate or provide any information. I just get the run around...


I don't understand, this post has no link and no text body, just a recursive link to this discussion page. Where is the "horror story" mentioned in the title?

EDIT: Oh I see, the original post is buried down in the thread, because it has been posted as a comment. Perhaps the mods could fix this?


I've processed successfully hundreds of thousands of dollars with my Paypal account over the pat 4-5 years. My account has been on review a few different times because of volume spikes (around the holiday season, I do ecommerce). When that happens, I usually reach out to Paypal and we discuss like humans, I explain where I'm coming from, they make suggestions and we get it settled. Around November 2016 Paypal reached out and told me due to the disputes coming in they need a $5000 set reserve + a 10% rolling reserve which will be released 90 days after a transaction. I accepted and since then Paypal has called me on 3 different occasions to check up on me and my efforts to reduce the dispute rate. We discussed and the calls seemed to go very well without them having any requests or EVER telling me my account is at risk of being limited and shut down due to disputes.

Towards the end of January I myself realized I tired of the disputes (seemed to be a quality issue with the product which got hundreds of 5 star reviews on my site but still disputes were coming in at around 2%) so I slowly stopped the business meaning I stopped advertising and the only sales coming in were trickling in organically. My volume went down from $200k a month to about $10k a month.

On Wednesday I log in to my Paypal account and it says it's limited they need more information.

They asked for Photo ID, bank statement, proof of address, supplier invoice, supplier contact info and proof of delivery for the last 5 transactions.

I provided everything but the proof of delivery for the last 5 transactions. From the resolution center whenever I clicked proof of delivery it brought me to a page with no transactions so of course I could not provide proof of delivery for transactions that don't exist.

I contacted Paypal letting them know I submitted everything but proof of delivery since there's a bug in their system, they said no worries i'll get an email requesting the transactions they need tracking for and I could just reply back.

I never got that email, but I did wake up Thursday morning with an Appeal Denied automated email saying my account is closed and the money will be frozen for 180 days. That's $20k CAD in my reserve + $15k USD in my available balance. Keep in mind in the past 30 days I processed less than $10k usd on Paypal in total.

I reached out to a supervisor at Paypal and told him what his happening simply doesn't make sense, i provided everything they needed except for what their system was unable to request/receive and that if they had any issue with what I provided they should tell me what it is and help me resolve instead of giving me the hammer for no reason. He said he couldn't help me but opened a ticket for both his supervisor and a supervisor from the limitation team to call me within 24 hours.

The limitation department supervisor never called me back but the business support manager called me back a few hours later. He called me from an unknown number in the evening, told me there's been a mistake, they added a second set of eyes to my account and they agree with me the limitation was unnecessary and wrongfully made. He said he just has a few questions and I will either get a restored access email in a couple hours or a call asking for more information in order to get it settled but he said there's a small chance of that happening, realistically the account will just be restored within a couple hours.

I never got an email or call again, so I called the following day. When I called the rep basically told me there's no evidence of a call and there are no notes on my account from that person/call and nothing was moved forward for a review.

I told him that is nonsense and to look harder. He eventually tells me there's evidence of a call but no notes, they tried to reach out to that supervisor and he wasn't available so there's nothing they could do for me, the decision is final.

I'm being treated like a fraud and a criminal when I'm a legitimate entrepreneur who's processed 10's of thousands of transactions successfully. I also paid them thousands of dollars in fees, never had a negative balance or anything of the sort that would put Paypal at risk.

Now whenever I call they are extremely rude telling me the account is closed they're holding the money and there's absolutely nothing I can do.

They have been rude, lying, inconsistent, unfair and have made 0 effort to resolve this amicably.

They have 0 logical reason to hold $40k of my money for 180 days, the only reason I can think of is they do this on 10's of thousands of accounts and gain big money off the interest.

When I log in to my account there's a notification saying they need more information from me. When I click on that notification it brings me to a page that says the account is limited because they need more information regarding my recent sales, they do not say what information or how to provide information. That is straight up illegal and a complete abuse of power.

I know there are thousands of Paypal horror stories but I genuinely feel abused. I have expenses, a family and so on and need that cash flow and no one at Paypal can be consistent for more than one phone call or help me resolve my issue, it's pathetic.

Just had to vent and hopefully this will give them some of the negative attention they deserve.


>My account has been on review a few different times because of volume spikes (around the holiday season, I do ecommerce)

What type of products do you sell? That also affects the triggers for reviews and freezes.

>but still disputes were coming in at around 2%

2% is really high. A lot of non-Paypal CC payment processors will flag your account when chargebacks exceed 1%.


>2% is really high. A lot of non-Paypal CC payment processors will flag your account when chargebacks exceed 1%.

Yes, 2% is insanely high. I do about 2k/month through paypal and haven't had a chargeback in years. I think the last one was a few years ago, and that was just because a customer had their credit card stolen and just charged back all transactions they didn't recognise.


Depends on the product. I've seen businesses run at 10%, and others at 0%.

Until you have a massive, public facing product that sells internationally across many facets of customer - you've probably never experienced the hell of CB management.

Typically, you'll get: - Stolen cards (obvious ones) - Stolen cards (very insidious ones - all customer information, proxies that match the customer address, etc). Typically the only way to catch these guys is to have a hugely expensive 'express delivery' option, and manually filter each order that comes through on this option. - Dumb thieves (chargeback the day after delivery) - Smarter thieves (chargeback the day after posting) - Horrible people (chargeback months later) - Idiots (Unable to use a product, so chargeback) - Assholes (Weaponise chargebacks to blackmail you)

Words to anyone struggling to fight CBs / fraud: - Use machine learning, ie SiftScience (or similar) to screen all transactions. - If you use Stripe, use their Radar feature. - If an order gets one flag, place it into a review queue, and manually process it 24 - 72 hours later. Emailing a customer smokes out the majority of fraud. - If an order gets two flags - blackhole the order (refund the card, if charged)

The biggest thing is making your fraud processes opaque to scammers. If your site returns true/false responses, they'll just keep hammering until they find a combo of cards / proxies / etc that works. The only way around it is to shadow-ban: - Send blackholed orders to an approval page. - Send blackholed orders an approval email. Train your customer service to know which orders were banned, which weren't.

If scammers have to wait 1 - 4 weeks to know if their order worked or not.. they will move onto easier targets.


> The only way around it is to shadow-ban: - Send blackholed orders to an approval page. - Send blackholed orders an approval email. Train your customer service to know which orders were banned, which weren't.

I wonder if this is why a friend of mine had to call in over and over about an order that kept disappearing.

That or the company really didn't want to fulfill their black friday sales.


>Depends on the product. I've seen businesses run at 10%, and others at 0%.

Which products have 10%?

>Typically, you'll get: - Stolen cards (obvious ones) - Stolen cards

Is this with Paypal? Paypal does a hell of a lot of work to prevent stolen cards being used. I've never had a single case of this happening since I moved to Paypal. With Worldpay I did have the occasional one.


> The only way around it is to shadow-ban: - Send blackholed orders to an approval page. - Send blackholed orders an approval email. Train your customer service to know which orders were banned, which weren't.

I don't use woot anymore because they did this to me... and apparently had no process for removing it.


Your chargeback rate is very high. Do those customers usually contact you first to resolve it? If you know there are quality issues, you should refund as soon as you have a complaint, not wait for a chargeback.

To the matter at hand: I think you'll eventually get the account back, probably within a week or two. (Just my personal opinion assuming the facts you have are true, I obviously can't guarantee anything.) Keep on calling, asking where to submit additional information.

If you're low on cash flow, figure out how much time you have. You will definitely eventually get the money, so if you can borrow to cover for some time at reasonable interest rates, do so.

Try not to argue with the people you speak to. Just keep on asking for what steps to take to get the account back.


I could potentially see where they are coming from : they have processed quite some chargebacks and/or refunds for you.

The revenue seems to be winding down and they may want to keep enough in the account to process future chargebacks and or refunds.

And to repeat the question from jasode: what kind of products do you sell?


Also, reading between the lines: he has not voluntary shut the business down. Who would do that?

This was already forced by PayPal. Lots of details missing here.


> Also, reading between the lines: he has not voluntary shut the business down. Who would do that?

?? People quit their businesses all the time.


I had a similar story. Launched a product - which ended up doing much more volume than anticipated. The account got flagged for information, and then went into the same non-sense spiral that you experienced: requests for the same documents, ignored emails, ignored calls, etc etc.

All in all, they had over 6 figures locked away. I managed to claw it all back no less than three months later.

Hints are: call every single day, and get familiar with someone on the supervisor level. One you have a name, you can start bugging them personally on a daily basis.

Most supervisors are slave to the risk department, but they can escalate claims.

PP really, really hates: - customer complaints. - backorders - slow deliveries

If you have any of these items, expect a world of pain. Once you can resolve them, expect a period of 2 - 3 months proving that you are consistant, and then living with a hold for the rest of your life.


Why did you post this as a comment and not in the body of the post? It makes it very hard to find.


> I'm being treated like a fraud and a criminal > Now whenever I call they are extremely rude telling me the account is closed they're holding the money and there's absolutely nothing I can do. > They have been rude, lying, inconsistent, unfair and have made 0 effort to resolve this amicably.

Sorry to hear your story. This seems to be a pattern with Payment gateways. I had similar with experience Gumroad. Their Customer service is rude - i left a note here few months ago for their future customers. https://news.ycombinator.com/item?id=13139000


You have my sympathies. A firmly drafted lawyer's letter should get their attention very quickly. This will cost you a small amount but it will bypass CS protocol and get you a senior.


I wonder if you could/should include the cost of the lawyer in the amount you demand from them... this seems like the sort of case that fee shifting was designed for after all.


And bill then for a day of your time at say 2x your normal day rate


Buggy resolution center page with no transactions. Calls from unknown number. No follow up emails. No notes on the account. No effort to resolve your issue. It sounds a little strange to me.

I apologize but I haven't seen anybody else ask these questions:

How did you find out that your account had been frozen?

Did you find out after logging in or were you reacting to an email?

Did you click a link in an email to get to the resolution center?

When you "contacted PayPal" to tell them about the buggy form, did you email or call?

If you called, what number did you call? Did you find it in an email or did you Google it?

When you called the following day and the rep said there were no notes, did you call the same number as before?

Did the rep on the second day confirm that your account had been suspended because of transaction disputes?

Have you logged into PayPal from your another machine (like your cell phone)?

Even intelligent, tech savy people fall victim to scams. I just want to make sure you weren't too trusting of emails and phone calls you received because they seemed consistent with the history of your PayPal account.


I appreciate your concern but I've been online long enough not to get scammed, or at least I hope so. Paypal actually didn't have the decency to send me an email saying they need more info to lift a limitation. I was only made aware of the limitation when I logged in to my account and saw on a notification telling me they need more info. As much as I hope this was a simple phishing scam it's actually just the shady way Paypal does business. There are thousands of complaints on the BBB website against them!


Also the number I called is through their contact us page using a 6-digit passcode which works only for 60 minutes and then expires so that's pretty secure.


They probably have two algorithms, one for x amount of profit and one for y amount of trouble. As long as x > y, they'll find a way to work with you. Ironically your slowing down the business probably had everything to do with their decision; x dropped faster than y. They have basically told you we don't need your business anymore, so F.U.

I hope you at least get your money back after 180 days. Good luck.


Do more than post it on HN.

Get a lawyer and get it resolved privately.

Otherwise, publish this on a website and promote it on twitter etc. to have them reach out to you.

Do you live in a state that allows one-party consent recording of conversations? You can sue them in your state. Too late now for the recordings, however.

* Look for other similar cases. Here is how one Redditor got $70k handled:*

Been a member with paypal for over 10 years now, done hundreds of thousands of dollars worth of transfers with them.

Recently launched a new product at a fantastic price point as a pre-order. Put it up on our website, did a big marketing campaign, sold around $65k in product (The remainder was money I kept in there because I used a Paypal debit card regularly).

They locked the funds mid last week, saying that i needed to provide invoices and the like. I did, then they requested more invoices and business information, which I sent them.

Now I got a email this morning stating that the money will be locked for 180 days. No way to appeal, nothing.

Our pre-order was quite short term, the customers will have all their products in their hands within two weeks or so, i have almost no product complaints and have delt with disputes typically within 24 hours of notification.

I'm at a loss. They just about ruined my company. We've done our best to offer what our buyers want at low prices, and doing pre-orders is usually the best for everyone because it allows us to buy in bulk from our wholesalers.

Will likely be calling a lawyer later today.

Edit : I ended up tweeting the president of paypal. He responded by escalating the issue w/ another paypal department. However one of the individuals who retweeted my status was subject today to a 'random account limitation and verification'. Odd, hunh?

Edit #2 - Thanks reddit and those out there. I got a call from a higher up at paypal just now and spent 12-13 minutes on the phone with them. We are working towards resolving this, and I feel there is at least some sufficient progress towards a quality resolution. Thanks for your help all :)

Edit #3 12/5/2013 - We just got in plenty of the pre-order products, ahead of schedule and should be getting out something like $25k-$30k of products in the mail to our buyers by the end of business today (Some went out yesterday). It will be very interesting to see how paypal responds to this.

Edit - #4 12/11/2013 - We had 72k, refunded the remainder, one guy had an order of around 7k and found our story on reddit, felt bad for us and ended up just wiring money to our business account so he could secure his place in line for pre-order. This took our account balance down to 65k or so.


> When I called the rep basically told me there's no evidence of a call and there are no notes on my account from that person/call and nothing was moved forward for a review.

Every time you call a company with a dispute or complaint, record it. May not always be useful, but better safe than sorry.


What happens if you lawyer up?


"...so of course I could not provide proof of delivery for transactions that don't exist."

Perhaps I'm missing something here, but isn't proof of delivery meant to be documentation from a shipping company? Why is the OP trying to get proof of delivery from Paypal?

Edit - I now understand the resolution center does have a problem where transactions are not listed, so the form cannot be submitted. Still, he could find the transactions himself and email paypal the required documents. I would do that before coming to HN about it!

Something doesn't sound right about this story. The whole mysterious phone call in the evening etc.


My understanding on that point is that he needed to see which transactions were the last 5 that he needed proof of delivery for and tried to find the details of the transactions (to then obtain proof of delivery from his shipping company). Upon trying to find these details he was unable as the paypal site wouldn't allow him to


Okay, so the resolution center failed to show the last 5 transactions. Seems like other people have this issue too...

https://www.paypal-community.com/t5/About-Payments-Archive/R...

That's sloppy of Paypal, but he could find the last 5 transactions himself from his normal history page, gather the required evidence and email paypal.


They do not accept emails, they email from service@paypal.com which is a no-reply address. The only way to provide them with tracking numbers is through the Resolution Center - yet in the resolution center they don't provide any transactions that they need tracking for. I emailed Paypal about this and they said they would send me an email with where to provide the info to, they did not send the email, they sent an Appeal Denied email yet I didn't even get the opportunity to appeal my case!


"they said they would send me an email with where to provide the info to"

If you have promises in writing, then quote those in future emails and remind them of the problem you faced in resolution center. Don't say "bug", but just that you need an alternative way to send proof of delivery.

I wouldn't mind seeing a screenshot of that email they sent to you promising to send you a future email. It's odd they would promise but not do it, considering they also made promises over the phone.

Perhaps throw together a blog page with screenshots and a timeline to illustrate more substantially their incompetence and your innocence! Let us know how you go!


It shouldn't be a huge stretch to imagine a customer service department having lousy or non-existent documentation. They said there was no record of the call, they checked again, then magically there was a record. Do you think it's more likely he imagined it or even lied about?


It could also be an innocent miscommunication between the two parties. E.g.:

- "Some guy called and said you're ok with me."

- "We don't have any record of that."

Both are right but saying different things. (ie seller was -called-, PayPal don't have any record that -the OK- was given).


You said it. "Magically there was a record of the call".

I don't buy it. This story shows signs of factual adjustment to make things look better for the OP. I'm happy to be in the minority on that position.


You are free to not buy it my friend, but one day Paypal will give you the hammer and you will see just how believeable this is. In fact, there are countless threads online with the same story. You've never had a rep from a big company say something and you call the next day and they have no record of that? It happens at least 3 times a year with my cellphone company, you must be very lucky!


All good. If you'd used your original HN handle rather than making a new one for this issue, and mentioning who you were and what your business is, that may have gone further in validating your story (for me at least).

Took me 2 minutes to find your post on Twitter, and from there your old handle and submissions on HN and details of your business. Your story now has more credibility. I'm all for anonymous opinions and discussion, but when it comes to seeking support in complaints against another company, it's best to disclose who you are (in my opinion).


I did say it, but I didn't say that. "Magically there was a record" meaning they had it all along and that customer service departments of that size are routinely slow to update or make simple mistakes, not that it fell from the sky as a small sliver of corroboration for OP's story. You'd sooner believe a stranger is lying from a throwaway account on a random forum than a phone jockey making a mistake...but at least you're happy.


Most likely those 5 transactions never actually existed. I'm saying this because it's a well-known problem that accounts sometimes gets flagged and you are requested to provide information about an transaction that never actually happened, I have encountered this myself (as a buyer). It lists a transaction number they want more information about, but you have never actually made any transactions at that time, and if you click on it you get a page that tells you that transaction doesn't exists.

Most likely there is a race condition somewhere in PayPal's backend that results in a transaction being partially logged to the wrong account, and then the inconsistent data makes the fraud detection system flag it.


I feel sorry for you. Truly. I have to say—and maybe you have heard it—but cryptocurrencies like Bitcoin precisely avoid this sort of horror story. When you receive a Bitcoin payment, no one can take the money from you (no chargeback fraud, no payment processor to freeze your account), thanks to the decentralized nature of the system because bitcoins are received directly into your local wallet.

Seek legal help to fight your case. And in parallel, look into accepting and promoting Bitcoin payments for your business.

Heck, Bitcoin is even becoming more and more popular among B2B business suppliers (according to BitPay CEO https://medium.com/@spair/the-bitcoin-fee-market-4df1857d12b...). So if you start receiving BTC payments from customers you may use them directly to pay your suppliers without even converting to USD.


Yeah, no. Bitcoin eliminates chargeback fraud by completely eliminating the whole idea of chargebacks. You can tell your customers that if they don't get what they paid for and you don't feel like helping them, then they're basically screwed. Let's see how many people buy your product once they realize that. Talk about the cure being worse than the disease.

This in addition to it being virtually impossible for ordinary users to even get bitcoins. People here are talking about losing double-digit percentages of their purchases from Paypal forcing users to create a Paypal account, which takes like 30 seconds. What percent of your customers do you think you'll still have after you force them to do a wire transfer to a moderately sketchy exchange website, wait 2-3 days, set up a Bitcoin wallet somewhere, figure out how to do Bitcoin transfers, etc?


You are right there is friction for customers to acquire bitcoins. My post was meant to expose the advantages for merchants, for whom there exists practically zero downsides (as opposed to customers.) But again I am not suggesting "forcing" customers to pay with Bitcoin. I am suggesting to add it as an extra payment option.

That said, it is becoming easier than you think to purchase BTC. There is no need to wire money anymore. In the US bitcoins can be purchased instantly with a credit card via Coinbase, as easy as signing up for Paypal.


> There is no need to wire money anymore. In the US bitcoins can be purchased instantly with a credit card via Coinbase, as easy as signing up for Paypal.

The caveats being a 3.75% surcharge and the fact that many of the big banks will not authorize bank card transactions from Coinbase. You might have luck calling up your bank and getting them to release the hold on Coinbase transactions, but that's already more trouble and more expense than paypal.


I literally laughed out loud at this. Bitcoin does not solve for any of this. Maybe it will stop some large corporation from putting a hold on your "cash" but bitcoin is by no means safe from theft. You can be your own payment processor, but you will still have angry customers. In fact you will probably have far less customers because most normal consumers want to protections that using a service like PayPal provides.


(Sorry I was in a hurry and miswrote! English is not my native language. I edited my post to clarify.)

What I meant to say is that Bitcoin eliminates chargeback fraud, because payments are irreversible. That plus Bitcoin eliminating the need for a payment processor who may freeze your money are 2 real problems that Bitcoin solves.

Theft is also solved by storing bitcoins in a hardware wallet (or 2 for a backup) like Trezor, Ledger, etc. To date no credible theft of coins stored in a hw wallet has ever been reported.

And I don't recommend to only accept Bitcoin payments. As you point out this would severely limit sales. At least sabslaurent could accept it as an additional payment option, which would provide an extra revenue stream not subject to Paypal's risks.


If you're outside of the US, it gets even more interesting.

First, you need to be VERY careful about using VPN or letting remote team members access Paypal. One misstep with, say, Hong Kong account being accessed from Ukrainian IPs, and you're blocked for a security review which drags for days and weeks.

Second, they completely neglect any special international shipping methods' unique constraints. Sometimes when you ship from China, the tracking will only appear when the package reaches destination country. This is considered an outright fraud by Paypal, which promptly returns money to the client and you're left with a loss.

On top of that, they will impose 3% commission for currency conversion. Did you ever hear of a bank taking 3% to convert between your multi-currency accounts? Well, "Paypal is not a bank".

Add to the mix their robotic support with that condescending tone.

No. I wouldn't touch Paypal with a ten-foot pole.


they are luxembourgish bank in Europe actually


OK, so when I click this post, I go directly to HN's comments section. Where is the original story? Missing URL?



I worked with paypal almost 10 years. I can tell you this. Paypal is an evil company.


I had this happen to me. I filed a complaint with the CFPB and within a week had my account unfrozen (i.e. still shut down but ability to transfer funds out)


We use PayPal for a few scattered customers who have problems paying with a card and the occasional eBay sale, so I don't pay much attention to it. Whenever I see a PayPal horror story, I transfer all funds out of there to my bank. It's not the most effective sweep method, but it works depressingly well. I wonder what PayPal's cash balance would be if it had a reputation as being a safe place to keep a balance?


> but it works depressingly well

I dont think it "works" though. paypal can withdraw funds from your linked bank accounts too. I think you would need to create an LLC , open a bank acct under that LLC, then sweep funds out of that LLC account to be "safe".


Or just immediately pull your money out of the linked account to an unlinked account.


If the OP were running an entirely legitimate business, they would have no issue revealing what product they are selling. They clearly do not want us to know what that product is. This is no doubt because we would have no sympathy for them if we knew.

That being the case, I'm calling bullshit.


LOL buddy where I come from you don't disclose an extremely profitable niche on a public forum online where the majority of the community is familiar with ecommerce and business online is general. I'm not saying what I sell because I don't need 10 more competitors. What I sell is 100% legit, it's been approved on Paypal, it sells by the thousands daily on both Amazon and Ebay.


This particular public forum also has a lot of people who know that a lot of "100% legit" digital-only crap sold on Amazon and eBay is anything but. Does that describe your product? Only grandma knows...


It's a physicial product with proof of tracking shipped from the USA man. It's an accessory that retails in countless physical stores. You're just trying to find a way to delegitimize my story and that's fine but it would be nicer if you asked questions instead of just calling bullshit with no back up.


Can you give us an idea of what type of accessory it is? Or at least, what are the concerns you had about quality? Is this something you have commissioned a manufacturer to build? Is it a dodgy supplement with claims that aren't backed up by science?


> so I slowly stopped the business

It's also a business he no longer wants to deal with. But he still doesn't want to share it 'for reasons'.

Also, at a 2%+ dispute rate he'd probably get shutdown on any other payment platform as well.

I'm also inclined to believe there is a lot more BS going around.


We quit using paypal 8 years ago for exactly this kind of treatment. Seems it has not changed.


Why would it? Obviously there are plenty of fools, who continue to do business with PayPal.


I sell on eBay, and if you don't accept PayPal very few people will buy from you.


I found as long as you could take a card, most people were good. Only some ebay addicts were tied to paypal. Ymmv.


I wouldn't move large volumes through Paypal. PP is useful for small donations and shuttling small amounts around, but not for the amounts being discussed here, because the larger the amount, the more it hurts you when things go awry.


I'm looking at using Paypal for my next business, and it scares me that there is no recourse whenever an issue arises. I need to receive payments and send payments to workers, mostly in Europe. I'm doing a marketplace for jobs kind of like Upwork. I'm based in the USA, so Paypal makes it possible. Are there any alternatives to Paypal? I've been talking with Payoneer, but they have not inspired much confidence. I had my paypal account frozen about 10 years ago for a bullshit reason, and I'd like to avoid using them again.


Did you check out Stripe connect?: https://stripe.com/connect I'm not sure if that will work for your business but it's worth checking into.


they are both horrible, payoneer failed to reactivate my account or even answer to my request plus they have very steep fees also if you have their card with some balance they ask insane 30$ yearly fee

PayPal is similarly bad, takes around 5% of my received income, but sadly 2 of my vendors don't accept any other payment solution and i can't afford to lose that income


i am using this market places and PayPal requirement would be very off putting, why not just use wire transfer? wire fees sure are much lower than 5% PayPal robbery they are committing when i am receiving money, I would much rather take off wire fee from money i am suppose to receive than deal with PayPal


Wire transfer is definitely the way to go if transactions are only Europe to Europe or USA to USA. Unfortunately, I'm doing business in UAE, too, which creates huge problems. :/


I have zero problems to do wire even from US to Europe, heck I did even transfers from China to EU, but with help of Chinese national to circumvent their low forex limits (of course this is not solution for regular business, but neither is Paypal in China, only reasonable solkution without help of local is bitcoin, which I find risky for large sums)


It might sound bad, but usually, when I was doing volume, and I would travel to the different country, region, I would call PayPal central and let them know. While I am all about privacy, this always made them put some comment on my account that helped me pass all the bad things. "We need more documents" issue? Solved in hours. $20K spike of revenue in few days? Not a problem!


yeah, lifting my limits work further verification was online ordeal for like 2 or more weeks since apparently my ID card with address and full name issued months ago is not good enough, my printed bank record from internet banking is not enough, in the end had to send them two other bank records from different bank to have my bank account back to regular

also don't get me started they steal 5% of my income and don't have live chat service to resolve issues and their FAQ is referring to website layout from years ago with most of the steps wrong

sadly still two of my vendors don't offer to me other payment solutions (well one does wire transfer but only for large amounts i can collect in months) so i still have to use this horrible service to not lose income


One of my top-ten rules for staying sane on the Internet is 'Never leave any money in your PayPal account.' Served me well so far - I had my account frozen but there was only $2 in the account. PayPal is horrible.


You are wise. I had money on my PayPal accont once. It was payment for a software feature I wrote for someone. Soon after I received the payment, they wrote an E-mail that it was a fraudulent transaction and froze my account. Of course I disputed it. Then my account dropped into negative balance: The payment was taken away and a fee was taken from me for disputing the claim. Of course, I refused to pay up my negative balance, despite their frequent reminders. After half a year or so (I was in negative balance for all that time), I got my money back, but they kept the fee for disputing the claim. PayPal - never again. Do not leave a dime on that account.


If you get any money on your paypal account without a bank account linked, you can't 'move' it.

So I just let Mrs BusError loose on a shopping spree immediately! that usually clears the balance in no time at all.


On top of that, never link a debit account to PayPal. If they try funny business with my credit card I can dispute the charges.


Queen Victoria supposedly told her daughter on her wedding night, "Just lie back and think of England." Whenever I have to deal with PayPal, I think to myself "Just lie back and think of SpaceX." If Paypal helps Elon Musk take us to Mars, maybe it's worth putting up with at least occasionally. (You can think of Tesla if you prefer.)


Apparently no details either. Where's the story?



As someone paying for products, I detest PayPal. I'm forced to do it rarely enough that I would pay 5-10% extra to avoid doing it. I realize I'm just one data point but perhaps there's a market here?

One case where it's especially frustrating is Etsy. There are many vendors on Etsy who refuse to accept any payment other than PayPal. (One can't use an Etsy gift card.)

Edit: add etsy note


I also avoid PayPal whenever possible.


this has been going on as long as paypal has been around. i never allow anyone to send more then a $1k to my paypal, everything larger than that gets check or wire. First time i got a $5k wire, they locked me out and held my monies for 90 days.... doesnt really help a growing business to have money locked. this was in 2002.


One of the most valuable lessons I've learned from HN was to autosweep my PayPal account. I am thankful that I was fortunate enough to learn this lesson before starting my company and running tens of millions through PayPal. I can't say for sure that I would still be in business if I hadn't.


I have a CAD Paypal account - but I charge customers in USD. To withdraw money I have to pay Paypal's exchange rate, they won't let me attach a Canadian USD bank account. That means I have to pay exchange rate to take money out, then pay exchange rate again to convert the money to USD to pay my supplier and Facebook Ads in USD. It makes much more sense keeping my money in Paypal, that they are a fraud of a company is a different story.


Have you thought of setting up a USD account with a US Bank? Canadians can do that without a problem at most branches near a border, and I expect it could be done remotely. Another alternative is to set up an account with RBC(USA) https://www.rbcbank.com/banking-in-the-us/checking-accounts/....


That would probably raise a flag to the IRS. I suspect the purpose for using Paypal, and a contributing factor for the freeze, could be tax issues


I think people use Paypal because it's easy to use in general, not because it makes tax evasion easier (I suspect it's a pretty dumb choice for that :) ). Taxes need to be paid regardless of how the money get brought into the country, and Canada and the US have a pretty well understood tax treaty.

When I opened up my account at the BOA, it seemed to be a very well used and smooth process - they mentioned that the number of Canadians holding accounts at that branch (close to the border) was a significant percentage of their total. I really doubt it raises any red flags on it's own - there are a lot of legitimate legal reasons for the arrangement.



Does this really work as a marketing strategy?


Yeah... pretty much the exact reason I don't leave any significant amount of money in PayPal at one time.


Where is the story? This post doesn't link to any article or anything.


I was also wondering. The OP put it in a comment which is quite far down the page currently:

https://news.ycombinator.com/item?id=13851124


You stopped advertising and still had passive income of 10k monthly ?


Yes, when I was advertising I was doing close to $300k a month - I advertised on FB, there are still thousands of people who have my shared ad on the top of their newsfeed to this day. On top of that, I rank #1 on Google for my main keyword..


are you on IndieHackers?


Nope, not sure what that is even.


https://www.indiehackers.com

"Learn from profitable businesses and side projects."

People like you get interviewed to inspire those who want to do side project or start a business.


Probably on a steeply declining trajectory.


and I suspect that's revenue, not income


I deleted my Paypal business account, never going back.


How surprising, I've never heard of this happening before

(this is sarcasm, for people who actually never heard of this happening before)


This is a case of KYC. Paypal wants to get to know you. Just talk to them. This looks scary to people who dont deal with banks and entities that act like banks, but paypal is doing this because they need to protect themselves from aiding people in money laundering, which is a pretty big deal.

If you explain to them what youre doing and come up with some proof, they will release your money. They do not want to steal it. Almost all these cases revolve around someone not communicating with paypal and then acting surprised when they freeze funds.

Any bank would do that. If my bank is hit wit ha 100k transfer and I don't say a word about it and then appear at the local branch and demand to cash it all out without an explanation of whats going on, they will refuse that, as well. And probably call the cops just to cover their asses. Seriously. Talk to them.




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