Instead of warning consumers, why not do what regulators do and, well, regulate? Here, you have entities storing unsecured funds and doing god knows what with it. In the interest of the public good, a just government and a conscientious regulatory body wouldn't busy itself warning anyone. Rather, they would be bringing down the hammer on these entities and making them an example of what happens to companies that try to destabilize the financial system.
> a just government and a conscientious regulatory body wouldn't busy itself warning anyone.
Regulatory bodies issue warnings all the time, that's one of the most essential functions of a government. Why? Because we don't like it when the government unilaterally acts on our behalf.
Warning people is also the cheapest option here, which matters in a society that is constantly obsessed with government spending. There are tons of bank-adjacent services out there (pay-day loans are just one example) and it would cost a fortune in legal fees to force everyone that holds cash for customers to register as a bank.
This way, consumers know the risks and businesses don't need to take on excessive regulatory burden. How is that a government failure?
going to guess most paypal / venmo users don't read the WSJ and likely missed "CFPB Director Rohit Chopra's Thursday statement"
even if 50% of paypal's users did, that means "the government" is servicing only those consumers that have lots of free time and motivation to be reading the business section. for those losers working 12 hour days who lose their money stored up in venmo someday, sucks for them!
This regulator statement is getting echoed in Reuters, AP News, WaPo, Yahoo Finance, CNN, CNet, Fox Business, CNBC, CBS News, Money, Business Insider, etc.
This is exactly how popular law changes are announced as well. Do you argue that citizens/people should not be bothered to know the law?
For better or worse, US regulation's first line of defense against harm/scams is public information campaigning. It's not clear that the CFPB has any authority to regulate PayPal, Venmo, CashApp, etc for their current business practices. The specific alert described in the article is about helping consumers know the legal / financial differences between these convenient apps and regulated banks.
> Do you argue that citizens/people should not be bothered to know the law?
we're talking about global multinational corporations like Paypal, not individual citizens, who absolutely don't and should not be expected to know banking laws and regulations so would not know that "by the way, Paypal is not FDIC guaranteed and your money can go poof at any time". it's irresponsible to let a vastly profitable enterprise like Paypal take advantage of vulnerable people in this way (holding onto their money without all the inconvenience of making sure their holdings are insured). turning the discussion onto "what should be expected of individual citizens" is an attempt to change the subject.
Banks are required to be FDIC insured because we want a place to exist where risk-averse people can store their money. So then they can go to a bank, put it in a CD and have an assurance that if the bank goes bust, they don't lose their savings.
The drawback of this system is that it's expensive. If you want to open a bank account, they're going to have some requirements, like having your paycheck direct deposited into it, or minimum deposit requirements etc. Or they'll charge you a fee. Somehow they have to make back that cost.
PayPal isn't a savings account. Its primary purpose is transferring money to other people. In normal use there should never be so much in the account that it should need to be insured. And not paying the regulatory overhead to be a bank is how they avoid the requirements banks impose to have an account.
There is no reason we can't have both. If you're risk-averse and you want an insured institution to hold your savings, you go to a bank. If you want to open an account just to transfer money, you go to a non-bank payment processor.
But now you're proposing to prohibit the latter thing and make everyone pay more for something even when they don't need it, instead of letting people choose when they do.
It's things like this that keep accumulating which cause the cost of living to go up faster than wages.
I am but a lowly individual citizen and I knew that PayPal is a terrible company, is not a regulated bank, offers a sketchy product, has been known to freeze/close accounts for opaque reasons, somehow be able to freeze the deposits of the bank account attached to the PayPal account. PayPalSucks.com has been running since last millennium with lots of this info.
It is not a bank. People should know it is not a bank. Hence, banking regulators have no authority over it.
You are saying should, but you haven’t shown under what legal authority the regulator can. You seem to be. Making a philosophical argument.
I would argue that, yes, it is okay to expect your average person not to understand the law. Of course, it would be great if everyone understood everything (laws, in this case) but that's not feasible.
The FDIC being in place means the average consumer does not have to understand nor think about the economics of a bank, for example, that by depositing money into a bank you are a creditor to that bank.
But your FDIC example is perfect. FDIC effectively regulates its member banks. But the end user still needs to know if the app/product they are using is protected by FDIC, which is the point of the CFPB announcement in the article. PayPal, Venmo, CashApp are not banks, are not regulated like banks, and are not member of FDIC (or NCUA).
So far I haven’t seen anyone in this HN thread bring up a valid action a US regulator could legally take that is stronger than this statement.
It is a symptom of a sick society when there are too many laws. Could a person even feasibly read the corpus of federal, state, and local laws in their lifetime at this point? What percentage would understand it if they could?
Fortunately many judges consider intent and circumstances in their rulings, but not always and that's certainly not where we should place our bets.
Most laws and regulations don't apply to everyone, they only apply to particular people and agencies. You really only need to know the ones that pertain to you. And while this is still a long list, behaving in a considerate manner works to avoid breaking many of them. For those with peculiar circumstances (such as owning a business or renting or selling property) there are specialists who can let you know in real time what your obligations are.
That is really not much consolation, because you have to know what the law is before you can discern whether it applies to you. You may think there is nothing relevant to you in admiralty law, but then you go and take a cruise, or order some merchandise transported on a container ship, and how do you even know if anything applies when you don't know what it says?
Even if we assume that people not in the oil business don't need to know laws about oil wells and people not in the gaming industry don't need to know laws about casinos, there are still more laws that apply to everyday activity than the average person could feasibly understand. Good luck to anyone in avoiding the tax code.
That would be fine if you were actually entitled to the warning.
Well, sometimes it would be. Spending thousands of dollars in preparation to do something you had no idea was illegal isn't going to get your money back even if it doesn't get you arrested.
But a warning isn't mandatory. Which turns "3 felonies a day" into the erasure of the rule of law, because then if you do something they don't like that isn't illegal, they can still throw you in jail just by sniffing around until they find something you're doing that is.
I generally agree that it’s generally a terrible expectation for everyone to know the law and how it is interpreted. The book “3 Felonies a Day” covers this. But it is the law we live under and the law created by the people we elect. Don’t like it? Vote with intention.
Police officers are taught the Cliff Notes of the law during police academy, in order to earn an LEO license, and by attorneys that work with the police department. As much as I would like individual officers to known more about the law, let’s not pretend like they know as little as the average citizen about the law.
They might see CNN, read Hacker News, or maybe see one of the many other news sources that repeat the CFPB's statement? [1]
But yeah, there are probably a lot of people who don't read news at all. I suppose this is what things like public service announcements and billboards are for.
are citizens obligated to keep themselves informed of anything? what should we continue to permit when it might have some sort of negative consequence for the underinformed?
Not the same as govt failure, but possibly govt ineffectiveness. If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. We rely on on institutions to act on our behalf to overcome this limitation. The question is really about where the risk threshold is that transitions their role from warning to regulating.
> If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions.
The government does not exist to make sure that you just get the right amount of information that you need so you aren't cognitively overburdened while they handle everything else for you behind the scenes. It's never worked that way.
> The question is really about where the risk threshold is that transitions their role from warning to regulating.
This came from CFPB, which exists primarily to warn against bad actors in the financial world. They're positioned to do this largely because the finance industry has repeatedly lobbied successfully to block effective regulation. To get around this, Elizabeth Warren created CFPB as an office explicitly to watch how the finance industry interacts with consumers post-2008. The fact that this warning even exists represents an improvement because CFPB was created exactly to do this. They do not have the power to declare who's a bank and who's not.
And to be clear, PayPal et al haven't committed any crimes here, CFPB is just pointing out that they're not insured as bank so you can't rely on the government bailing them out. CFPB sued Wells Fargo over the fraudulent account scandal, etc. They're more than capable of acting when crime has occurred. The problem (and this is the product of the finance industry understanding the game) is that a company failing isn't itself a crime. No bank execs went to prison over 2008 because they didn't commit any crimes as the legal system defines them. The best thing the government can do in so many cases is warn people not to be stupid with their money. They can't actually manage it for you.
Yes, it has. When the FDA was formed in 1906, it didn’t write memos to notify buyers about the state of the meat-packing industry, it banned them. When thalidomide was found to cause birth defects, it was banned.
When the Federal Reserve Act was passed, the result was not just a letter written to customers of specific banks. It brought specific changes on how banks may legally operate.
The purpose of the Fed was not to regulate banks, but to create a fiat money system instead of a gold reserve system. The purpose of a fiat money system is to enable the government to print money and spend it with wild abandon, resulting in endemic inflation, and has happened to every single fiat money system.
The Fed and the government will never admit this, however, which is why they blame inflation on:
1. speculators
2. profiteers
3. wage-price spiral
4. cost push
5. demand pull
6. Putin
7. Arab cartels
8. oil companies
and about anything else they can think of. Anything but the real reason.
One of the more astonishing pieces of propaganda coming from the Fed is the idea that 2% inflation is some sort of "good for the economy" thing. Astonishing in that people buy it hook, line and sinker.
What it is is a 2% annual tax on the economy. Even worse, your illusory inflation "gains" on assets then get taxed, too.
Although I agree wholeheartedly with the economic logic, I have a couple of minor counterpoints:
1. Constant 2% inflation at least doesn't have the negative effects of unpredictable inflation, its just a 2% tax.
2. Certain prices appear to be slightly sticky in that they don't go down, for example, wages are almost never cut in nominal terms, for psychological/cultural reasons- people tend to quit if their wages get cut. Slight inflation allows these to slowly decrease without running into the asymmetric price stickiness behavior.
I'm actually ok with a 2% inflation rate as a means of funding the government. I just wish the Fed and the government would be honest about it. I don't like losing all respect for the officials pushing the propaganda.
"As we have repeatedly emphasized, maintenance of the gold Standard means that the stock of money must be whatever is necessary to balance international payments. On the other hand, the real bills criterion sets no effective limit to the quantity of money."
-- Monetary History of the United States, pg 191, Friedman
Didn't Friedman also acknowledge that more recent monetary influences (1980 onward) deviate from the data he used to draw his conclusions in Monetary History of the United States? In other words, the statistics he used wouldn't necessarily draw the same conclusions today?
In that context, his statement is fine as a historical study but may not be suitable to model current economics.
I think the confusion between our points is that the GP was referring to the “govt” and not “CFPB”. The govt is a bigger umbrella that contains regulators, but that isn’t mutually exclusive with pointing out the CFPB can’t regulate.
Beyond that, the govt is a service organization. Those services run the gamut from physical security, to regulation, to providing information.
Because we don't like it when the government unilaterally acts on our behalf
We're not all libertarians and many of us believe that the government has a hand in promoting a well functioning society -- including regulating bank-like entities to be sure that they are a safe place to keep our cash.
While I know that Paypal isn't a bank, it's not at all obvious that my money is less safe stored in my Paypal account than in a bank and that if Paypal goes bankrupt tomorrow, I can lose whatever cash I have with them.
Exactly. If I had to pick only one job that I want the government to do, it would be coming down like a ton of bricks on companies that are behaving badly and profiting at the people’s expense.
Most of the problems in the USA right now can be root caused to “the rich and corporations running roughshod over everything and everyone.”
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
> Here, you have entities storing unsecured funds and doing god knows what with it.
Your first mistake is assuming that when you transfer, say, USD $500 into your Paypal (or Venmo or...) account, your Paypal account now holds USD $500. Rather, you are effectively exchanging USD $500 for Paypal bucks. When you transfer your Paypal bucks back out to a bank account, you are effectively purchasing fiat currency with your Paypal bucks.
That Paypal shows your balance in USD (or whatever currency you use) is misleading; it's similar to a mutual fund balance which shows the current value of your shares in USD. You don't actually own USD $500; you own 500 Paypal bucks which have a current theoretical value of USD $500, and are thus not subject to banking regulations.
I'm not saying this is good, or that it should be this way, but rather that's effectively how it works.
Now, can somebody tell me why banking regulations don't apply to my airline miles? After all, I've earned them and they are theoretically worth USD, so shouldn't they be protected?
If that were true, PayPal would be able to generate an easy profit by saying “PayPal bucks” are worth $0.80. They have the ethics to do that but they don’t because they do in fact keep their books in real currency and if you transfer $100 USD they have a legal obligation to give you that amount.
What it’s not is an FDIC insured bank, so if they make a huge mistake you’ll be one of millions of people making claims against whatever assets they have left.
> if you transfer $100 USD they have a legal obligation to give you that amount
I don't think they have any legal obligation, given the large number of times they have decided to simply keep people's money and never return it for no discernible reason.
Sure, most of the time for most people you can get the money out just fine, but no guarantees with paypal (venmo, etc).
They wouldn’t need the terms of services clauses they’ve cited in those cases if they could just say “we have no obligation to give you the same amount as we received”.
They already do this, just not for "friends & family". That's part of the hook to get so many people to sign up and use it, making it a huge value-add for businesses.
Any sort of business transaction pays fees, making $1 equal roughly $0.97.
You should review the money transmitter rules under which PayPal is regulated. They’re not the same as banks, they have a much narrower charter; but they are required to safeguard those dollars and that is what is represented in your account. There’s generally a small set of permitted investments that are intended to as closely as possible track dollars.
It doesn’t have a similar characteristic to a mutual fund balance, it’s closer to a money market fund.
> Now, can somebody tell me why banking regulations don't apply to my airline miles? After all, I've earned them and they are theoretically worth USD, so shouldn't they be protected?
Are airline miles theoretically worth USD? Afaik, they exchange for flights on a X points = Y class flight basis, not on a dollar basis. Yes, you can usually buy more miles for USD, but price to buy isn't price to sell.
FDIC member banks are subject to regular and special assessments by law to pay for deposit insurance up to the legal limit for their depositors. Much like insurance premiums. I do not imagine that your airline pays for airline mile insurance on your behalf to anyone.
This is true but it is also a distinction without meaningful difference. Transferring money from your account in Bank A to one i Bank B poses the same "problem." It's not Bank A bux to Bank B bux, it's $currency. But what actually happened is that an "excel sheet" in Bank A went from +$XXX,XX to +$(XXX,XX - 500) and the other's $(YYY,YY + 500); part of one bank's liability (their debt to you) was transferred onto another bank. Now Bank B owes you (at least) USD $500. Whether or not they see fit to make you whole that amount is akin to whether or not PayPal would.
Kicker: if it can't or doesn't want to pay you, that's a you problem.
> Your first mistake is assuming that ... your...account now holds USD $500.
Same mistake with making an uninsured deposit at any bank. A deposit at a modern bank is just a possibly insured low or no interest loan to the bank. It does not mean that the bank actually has sufficient assets to back it up or can liquidate them in time. It is bank money exchangeable for U.S. currency, but not U.S. currency. A large number of mostly business depositors at three sizable banks almost found that out the hard way in the past few months. If the FDIC did not stretch the law those businesses might be getting cents on the dollar months if not years down the road.
"it should be workable" sounds suspiciously hand-wavy and sounds particularly naïve about law.
EU and countries in the EU bloc are governed by completely different laws than the US (and the constituent states).
This particular regulator (CFPB) is considered illegitimate by most Republicans (the bureau leadership has more independence from the Executive Branch than they would like) and is still fighting decade-long court cases to continue to exist. It's not clear how much actual authority this bureau has to force companies to do anything.
IANAL, but I am quite sure that is not how our country works. The closest legal possibility to what you're talking about is the government buying PayPal and turning it into a bank, but that's not happening anytime in the foreseeable future.
At least require the apps to all have an option to automatically withdraw any funds sent to the balance, at least within excess of some marginal amount. Let them leave the option disabled by default, but at least it gives us a reasonable way of not needing to constantly remember to withdraw funds.
One additional benefit is it would put some pressure on the apps to offer practical incentives for users to maintain a balance instead of using the automatic withdraw option.
It is really easy to tackle this problem. Do what the RBI (Reserve Bank of India) did and create a policy whereby PayPal has to payout funds to customers attached bank account in 1 day. RBI banned PayPal from holding funds. And not just PayPal but Stripe and every payment processor out there (unless you are using a MOR then this rule currently does not apply). Since implementation of this rule, PayPal and Stripe are forced payout funds every day for all funds collected from customers throughout the day. They cannot hold any funds. Once payout is initiated, it may take 3-5 working days for the funds to be realized in the account (which I blame SWIFT for being so damn slow).
We really have enough federal regulation on money to be honest. Just get your money out of venmo/cash app and put it into your bank account and there will be no worries.
This is such a bizarre take to have in 2023 when we just had the 3 of the top 4 bank failures of all time. Yes they were fully backstopped by the FDIC (even though they shouldn't have been) because they were the first out the door. The FDIC can't back them all.
Adding to that their plans to engage in fining people for "misinformation" [1][2] They back-peddled but I would not be surprised to see them take another stab at it.
I would put "misinformation" into quotes, because iirc the policy was written so vaguely that it basically allowed them to fine you for whatever they disagreed with.
No. Some organisations go to great lengths to try to narrow down what counts as "misinformation". But it's tricky: the campaigns they're trying to protect against are usually politically-motivated, and international regional politics is a fast-changing field, and any policy you put in place will be immediately gamed.
Yup, and all because they are (and always have been) “not a bank” — just a tech company that you deposit your money into, who makes loans and investments with that money, and provides services to help you move that money around. It’s completely different, see?
Meanwhile I’ve been trying to get them to close my account for over a year after they allowed fraud to occur and still tried to make me pay up even though my credit card deemed it fraud as well.
Consumer Financial Protection Bureau Consumer advisory: "Your money is at greater risk when you hold it in a payment app, instead of moving it to an account with deposit insurance", June 1, 2023
https://www.consumerfinance.gov/about-us/newsroom/consumer-a...
You're correct and I want to tell other readers that PayPal/Square are regulated by the CFPB and the CFPB is a very useful way for a regular person without a lawyer to fight back when something goes wrong.
My Wife has had a small home-based business for 10 years and her customers pay through PayPal about 50% of the time. It was going great until she had a major surgery and put her business on hold for a few months. When she was able to resume, PayPal decided, seemingly arbitrarily, to hold all customer payments for 21 business days going forward because her sales had dropped. That's all, that's the reason that was given to her.
As a small business, this is devastating and there is absolutely nothing that can be done about it unless she increases her sales back to what they were previously, which unfortunately is unlikely given the inflation and economy here in the US. Anyone who runs a small business knows that you need cash to buy more inventory, and if your liquidity is sitting in PayPal so they can get interest on it, your sales are going to slow way, way down.
In 10 years (nearly 11) she has had one customer complaint through PayPal. The customer said she never received her item because, according to the customer herself, it was stolen from her porch after USPS delivered it. In what world is that the seller's fault? Only in PayPal's (and apparently this particular customer).
That is an incredible track record given that period of time and the number of sales she has had (10s of thousands of purchases over that period).
Many of her customers have said they would go elsewhere if she drops PayPal as a payment provider, which will only make things worse (much of her business is repeat business, like 80%).
PayPal finds or manufactures reasons to hold the money you worked your butt off to earn so they can sit on it and, I guess, earn interest. You have no recourse. Zero.
This is actually the one thing that makes some sense in their fraud policies. It goes like this: if a business is growing then chargebacks that roll in later will roll in against a larger volume of transactions, so the merchant will be most likely flush enough to be able to pay the fees and roll back the charges. If there is a steady state then as long as things don't get into very high risk territory it should all still work.
But if a business shrinks then suddenly PayPal itself becomes exposed: the volume in sales could drop faster than the liability from recent sales that are still in the chargeback window reduces and at some point there may be the possibility that PayPal will have to cover chargebacks for the newly defunct merchant. To guard against this possibility any rapid drop in charge volume will result in an increase in the hold back time.
So while understandably very annoying it does make some sense.
(I can't believe I've found a reason to stand up for PayPal for once and I hate them with a passion but this is simply the way any party that uses a shared merchant account will deal with the problem, if you don't want to have this you'll have to bring your own merchant account along and then things will be a little bit easier, but VISA, MC and AMEX all have similar rules on their books).
I was locked out PayPal and funds this week. I’ve been outside the country for over year, so my Google Fi access got cut off. I migrated my number from Google Fi to Google Voice, then discovered that PayPal won’t allow Google Voice numbers. Unfortunately, that phone number migration can’t be reversed. I spent hours on the phone with PayPal customer support but they said they can’t override the automated system. They also said they don’t have an escalation path to corporate. I am very skeptical about the current state of PayPal corporate and employees, and whether anyone even has ownership about these systems anymore. Venmo is an equal state of dire.
Agreed, we need larger denomination notes to keep cash usable. Despite decades of inflation the largest notes printed are $100 and it has been that way since 1969. Even $500 note doesn't get us back to buying power parity (it's about $800 btw).
The Bank Secrecy Act requires banks to file a currency transaction report when a customer makes more than $10,000 of cash transactions with the bank in a single day. "Structuring" aggregate transactions to stay under the limit can get you thrown in jail, and your money seized.
That law was passed in 1970. The amount hasn't been adjusted since then. It would approach $80,000 today if it had been indexed for inflation.
Don't know about you, but I don't foresee anyone sponsoring legislation to relax these reporting requirements, or otherwise making it easier to conduct private cash transactions with anything but toy amounts of money.
I've been to places that only accept credit card and it's infuriating as a consumer, and confusing given my relationship to small businesses. Consumers expect the same price regardless of their method, but the card fees are painful. Especially given our (former) payment partner (but really the CC companies) are doing everything they can to take more money[0].
I've been to places that only accept cash and it's infuriating as well, so I boycott them. Cash is dirty and annoying to deal with for customers and merchants (as a young adult I used to work in a high-volume coffee shop).
Cash is not king. If you're in the US and you're paying without using a credit card you're effectively losing thousands of dollars more than those that do. You can disagree that credit cards should have the ability to pay users cash back or offer travel rewards, but you are losing money by using cash.
By switching from cash to a citi double cash card that's a 2% rebate off the bat. If you are buying groceries you can use cards that give 6% cashback on groceries. And there are ways to get much more value.
I have nothing against credit cards and believe that proper use of them is beneficial for most people, but I vehemently disagree that cashback and not getting them is constituted as a loss for the purposes of this conversation.
I learned this hard way (ok not hard way, I had balance of 2 USD at that time) when Revolut locked me out. They simply stopped releasing new version of their app for Android version I had. Day by day I lost access to my money.
I simply got error that I can't log in and I should update an app but there was not any update.
Took me two days to get to their support (I don't know how it is now, but at that time all ways was directing me to use support option in app which was not functioning). And support told me if I want to get my 2 USD I should buy a new phone.
2 USD is nothing to continue the fight but I've understood I don't want to give any money to such operator. I am not Revolut user for more than 6 years now.
I'm not sure how it is in the US, but if you cancel a bank account here in Europe, you're supposed to add your new bank account number so that they can transfer your remaining balance there. The issue with PayPal is that you don't have any rights when it comes to your money. If they lock you out, as far as I can tell, your money is just gone (or in order to even have a chance of getting it back, you'd have to go to court).
I recently had my venmo account terminated out of the blue, and this is the best explanation they could give me:
> We have systems in place that monitor activity on Venmo, but please note that we don't reveal information about our internal systems in order to keep these systems robust. However, I'd recommend looking over our User Agreement for information on our policies surrounding acceptable use and high risk activity.
> I apologize that we're no longer able to assist you.
Thankfully I was able withdraw my cash, but I've been telling everyone I know to be careful when dealing with venmo; you really can't trust them
US Bancorp closed my checking account, because I used Zelle heavily. First, they terminated my Zelle; when I called the customer service, I was given two weeks to move my funds to another bank, as they gave a notice to close my account. This happened to another redditor too, who used Zelle frequently, and he banked with Union bank (in California), now owned by US Bank. US Bank closed his union bank account.
Banks don't want any risk whatsoever; they just want profitable customers. Frequent cash deposits, close the account; deposit money orders often, close the account; use zelle heavily, close the darn account; you don't use the debit card to purchase stuff, close the account.
now that zelle has adoption I don't even know what venmo adds anyway
I still use the old paypal for juggling payment methods, like when I leave a credit card at a bar and cancel it, I don't have to punch in a new one everywhere, just paypal.
but cash transfers to people have been bank to bank anyway so no need for extra services there anymore.
be careful with Zelle, if you send to the wrong person / get scammed, there's no way you're getting that money back. With Venmo / PayPal, you have a much better shot.
haha thanks for the warning but I guess that's something that's never crossed the mind of the crypto crowd for example... pretty refreshing to see someone worrying about the details
My theory (which I included in my emails) was that I was receiving funds from people I hadn't transacted with before. For my wedding, I had requested money for a "housing fund", and many friends/cousins/parents'-friends/etc were gifting via venmo
I could also believe that something dumb my friend or I said was flagged by their systems. Unfortunately they won't talk to me, let me explain any transactions, or give any hints about which transaction caused the ban ¯\_(ツ)_/¯. I've never had any warnings either; straight to permabanned.
Salt in the wounds was watching John Mulaney's bit on venmo[1] the next week
Paypal locked my account and won't do anything unless I provide data to prove something I care not to prove. All unsubscribe mechanisms are locked behind a login...
The result has been a complaint to the CRTC(Canada) for sending CEM emails without an unsubscribe mechanism. Oops.
I have tried removing the several hundred still in a frozen PayPal account (for over three years now) but PayPal won't give me access to MY money nor will they tell me how to get access in order to remove it.
They are nothing more than common criminals in FinTech drag, in my opinion.
In europe, they are a bank which means that deposits are insured
In any case, evidently Paypal has been more stable than banks.
There's a real need for digital payments and none of the regulatory frameworks in europe or america take that seriously. So people will keep flocking to those easy to use ubiquitous services
It is! To be fair it's easier to build something right when you don't have 20 years of legacy systems that need to keep running. Also, while SEPA covers fewer people, there are 36 countries involved.
I believe https://empsa.org members should eventually be interoperable with UPI, among others.
It's the only bank/money service I used that terminated my account. I didn't used it very much. One day I got an email that I violated TOS. (At first I thought it was fishing. lol) They gave me 180 days to withdraw funds, though. (Which is nice of them. I guess.) My last payment/money transfer before the ban was a donation to OpenBSD. That shouldn't be illegal.
My boss used Paypal for several years for odd eBay sells. (Commercially, but only three, four times a year.) When they suddenly wanted to see copies of bills and passports. He eventually gave up, with still around ~100€ locked up.
In the US I’ve had decent luck with Zelle in the past (my bank had support for sending with it), but recently I’ve just been using Apple Cash with family.
The article tacks on Apple Pay, which is a nice grab for attention since Apple Pay can’t store cash (Apple Cash does that) and no Apple product is discussed in the CFPB source…
I learned this the hard way nearly many years ago. Sold an item via eBay, customer paid via PayPal. PayPal accepted the funds I shipped the product and thought all was well until PayPal takes the money back saying the customers card was stolen. So then I was out the item and the money. I don’t keep a cent in the account for a second longer than I have to now.
When you accept Paypal payments, you are accepting credit card payments. Credit card payments can easily be reversed. For the payer this is a feature, and for the payee this is a risk.
So this doesn't sound like a Paypal-specific issue. The same could have happened if you accepted credit card payments through some other entity like Square.
> When you accept Paypal payments, you are accepting credit card payments.
When you accept Paypal payments, you get no access to the customer's credit card information or identification. This is either a legal interpretation that allows Paypal to push all of its risk down to its customers and make money for nothing, or the actual law is explicitly allowing Paypal to push all of its risk down to its customers and make money for nothing, but either way it's corrupt.
Yes and no. PayPal and eBay are both notoriously “buyer-biased” - meaning the chance of a buyer dispute being resolved in the seller’s favor is basically none, while with a normal credit card, it’s possible for a seller to win if you have good evidence. It’s guaranteed that if you buy a laptop, even from a seller with a great reputation, and send them a picture of a box with a brick that supposedly was delivered, PayPal and eBay will both rule in your favor. They can afford to completely burn sellers like that (who may not even have a viable plan B) more than they can afford word catching on among consumers that you can simply lose your money to fraud on the platform.
Note that AH4oFVbPT4f8 said that the claim was that the card was stolen. Evidence from the seller that the item was really shipped is not going to matter in such cases. So I don't think this is specific to Paypal or Ebay.
With paypal as long as you ship to the paypal address and have proof of delivery you are covered under seller protection. Most other credit card processors don't provide this.
Seller protection does cover bank initiated chargebacks for fraud/charge not recognized and item not received. As long as you have proof of delivery to the address provided through PayPal.
It wouldn’t cover item not as described, like a buyer saying you shipped a box of rocks.
Also, I wouldn't give them direct access to my main bank account.
You don't want online fraud or some dotcom's Kafkaesque behavior to unexpectedly empty your main account of money that you need to pay rent, and have the dotcom simply refuse to talk with you.
In general, I try to minimize how much money I have sitting in dotcoms ('move fast, break things, disregard regulations, cash out' sociopathy). Relatively trustworthy are some traditional institutions (e.g., Fidelity Investments, some retail banks and credit unions).
The UPI system adopted by India sounds promising to solve problems like these, where users can use the app of their choice and connect it to the bank account of their choice.
Eventually, you have a system where bank-to-bank transfers happen instantly with no intermediary apps holding your money.
They can't freeze them, but they can transfer money out. It would be illegal, but a lot of effort on your part to prove anything, and until it makes it through the courts you are out the money.
The above isn't just PayPal, it is anyone who has your account number.
it will be trivial to reverse unauthorized ACH debit from your bank account to paypal, just call your bank as soon as you notice, create a Fraud complaint case and they will take care of that (clawing money back from paypal/whoever fintech)
Good lobbying. They just do everything a bank does without any of the obligations. Honestly I’m surprised some real banks have not tried to become like PayPal to allow more sleaziness.
They are licensed as a money transmitter like Western Union. It is a lessor form of regulation. So while they look "bank like" in some things they are not legally a bank.
I'm of course not suggesting "crypto solves all the problems."
I am absolutely suggesting -- it feels like a lot of the haters of crypto forget how absolutely mediocre of a job everything else does with "money" too.
Yes but crypto has no customer protection. You make the transaction, your money is gone. Seller screws you? Oh well. Your key was stolen? Better luck next time.
There’s no perfect system because we’re all out scamming each other.
That says nothing against my point. If the "real thing" has little consumer protection as well, crypto comparatively becomes more attractive. There's ALWAYS risk.
I said nothing about solving problems, more the opposite. If the "real thing" can't be relied on to an extent, then might as well go with the risky thing.
I didn't need this warning, for the simple reason that cash stored in those accounts do not earn interest. A real bank account pays enough interest these days to justify the few seconds transferring funds to a bank account.
So the regulator's solution is not to rein in the problematic behavior using their regulatory power, but to tell people to be individually responsible? It's OK for Venmo and PayPal to go on being predatory because why?
That's a fair criticism if we are looking at "regulator" to strictly apply only to the CFPB. However, the government of which the CFPB is a part is able to regulate financial institutions, but has not.
> But industry trade group the Financial Technology Association, which represents both firms, defended the safety of the funds.
> “Tens of millions of American consumers and small businesses rely on payment apps to better spend, manage, and send their money. These accounts are safe and transparent,” the group said in the statement. “FTA members provide clear and easy-to-understand terms in all their products and prioritize consumer protection every step of the way.”
I don't see where the defense is in that statement!
The defense (lie) is here: "These accounts are safe and transparent,"
Safe: No, people lose their money to these companies all the time.
Transparent: No, these companies stonewall people after stealing their money. They claim this stonewalling is legally required by AML laws or to deny information to criminals, but no matter which way you slice it, 'transparent' is a lie.
I have used PayPal once or twice some 15 years ago when I bought some stuff on eBay, but never since, I never had any need afterwards. I didn't quite understand it back then, I was rather young.
Nowadays I buy from web shops when I need something, I give them my one time Revolut debit card number and that's it, risk free.
So my question is:
Why would someone use PayPal? What is the use case here?
You would use PayPal exactly the same way you use Revolut since they live in the same space. Neither provides insurance for deposits, which is what the CFPB is cautioning against in TFA. So I return the question to you. Why would someone use Revolut over PayPal? That's a rhetorical question, you don't need to answer.
(Law of the internet: if an opinion/review of a product mentions a competing product by name then it is in fact an advertisement for the competing product.)
I can't pay for Crossover by credit card :) Don't know what payment processor they use but it failed twice for annual upgrades. Said card works fine on a lot of other places, big and small.
I could pay with PayPal though. Even though the same card is behind it.
Keeping any money on there though... no. Even though I'm in Europe.
I use PayPal because it's convenient (lots of places online nowadays accept them) and safer than giving out my credit card information directly (obvious reasons).
However, I'm well aware they aren't a bank in any traditional sense so I only keep as much money in my account as I am willing to lose to a random act of god.
