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I made $200K and PayPal locked my account
474 points by blasten on Feb 9, 2013 | hide | past | favorite | 270 comments
I'm the creator of turn.js (www.turnjs.com), a javascript library for books and magazines. I released a commercial version in July 2012 and six month later I made $200K. I don’t know how, but I made it.

PayPal has closed my account because I don’t have a social security number. It seems like I don’t qualify for one because I’m just “an international student” from Venezuela.

I have been working really hard to release a product for publishers that converts PDFs to HTML5 for books and magazine with the brand-new turn.js 5th release.

I don’t know what to do or where to go. I don't have more money.

Please help.

Any suggestion would be appreciated.

blasten@gmail.com

Emmanuel




Wow, the sheer quantity of unhelpful advice in this thread is simply mind boggling. Hey, let's all hate paypal because they "steal" people's money. Ignoring the seriously thorny legal bramble that the OP has run headlong into with nary a concern. There is a bounteous variety of comments of the form "Paypal sux! {Use X instead!}" Where X may be stripe, or wepay, or whatever. Ignoring the fact that stripe wouldn't help in this case (it's US only), if you go read the terms of service of stripe or wepay you'll find exactly the same things there as are at issue here. You'll need an SSN or EID or tax ID with stripe too, just as you would with a WePay business account. There's a reason for that, and it has to do with the law.

There are maybe only half a dozen reasonable, substantially helpful, and actionable replies in this whole thread (which would put it at maybe a 4% SNR), almost all the rest is useless. If this is what HN is going to be, I don't want it.

As for my advice, it's simple. Go talk to a lawyer as soon as possible, you have a lot of issues that need sorting and a good lawyer is absolutely necessary to get through those issues, and they'll help to put you on the right footing to deal with paypal. It sucks that you have been acting in good faith and doing good work and have gotten tangled in the mess that is the many layers of laws, regulations, and corporate policies that make up our modern immigration, taxation, and financial systems. You have my sympathies for that and I wish you the best of luck, hopefully you'll be able to keep the proceeds of your excellent work without any serious negative repercussions.


I've replied with some very practical advice relating to OP's specific situation (F-1 student) here: https://news.ycombinator.com/item?id=5191832

(Sorry if this sounds like I'm promoting it or anything. I just don't want my comment to get buried among the 150+ other comments here.)


I used to be an international student in the US. So I feel OP's pain. I have an advice in addition to winter_blue's. However, I have been out of the US for 3 years and I don't know if any rules have changed since then.

Besides applying for precompletion OPT which will take months and months, a much quicker route for me was to get a part-time job at school. I did this when I was working as a CS tutor in my CS department's lab. This could still be possible for international students, it's definitely worth checking right row. The reason a social security card or a tax ID is needed for international student is solely for tax purposes. Yes, you read it right, we pay sales tax and income tax and don't get to vote or a path to citizenship in less then 20 years. I suspect your funds were frozen because PayPal could not determine whether your money should be considered income or something else. If it's income, you'll have to pay taxes.

I don't know which school you go to, but generally there should be hundreds of part-time jobs in all sorts of variety available at your school to accommodate students in work-study programs. You can apply for a job to be a lab janitor in a day and get your SS card in less than about 2 weeks. Once you have that then you can file a dispute complaint with PayPal.

Good Luck.

---Additional Advice Here After Edit---

If your 200k is saved towards paying for your tuition and living expenses, and you have money problem now, you should talk to your school's international student's office and/or legal counsel immediately. You might be allowed to work off-campus and stay in school under the premise that you are in "economic hardship".


This is a bad idea. Getting an SSN does not solve the bigger issue of work authorization. Having an SSN would make Paypal happy, but he could be deported by SEVIS/USCIS/ICE for earning an income without proper work authorization.

F-1 OPT is the only status I know that allows you to earn an income while being self-employed.

Even on an H-1B doing what the OP did would be a violation of status, and could lead to deportation.


    Getting an SSN does not solve the bigger issue of work authorization.
That's right, but I didn't say getting an SSN will get you a work authorization. As an international student, you are legally allowed to be employed on-campus[1] on a part-time basis provided that you maintain your student status, which basically means you have an above minimum GPA and not serving any academic disciplinary actions. In order to get a permission to work on-campus, you need to file an I-9 form, then get an SSN, then you can start working, but you can get a job on-campus before any of these happens, as long as you don't get paid before you have I-9 filled out, authorized by CEVIS and have an SSN.

    F-1 OPT is the only status I know that allows you to earn an income while being self-employed.
Generally, that's impossible, unless you incorporate a sole-proprietorship, which is generally not possible unless you change your VISA status to O-1 (alien with extraordinary abilities) or EB-5 (investor with 500K - 1 mil in the bank) or some other forms of partnerships with a citizen, and apply for an H-1 for yourself through the company. You are required to pay income taxes if you are "employed" or have any kind of income. You cannot show that information if you don't have the proper paperwork, and you can't have those paperwork unless you are employed under an organization that can issue you work-authorization.

[1]: http://www.bu.edu/isso/students/current/f1/employment/on-cam...


I'm not sure what you're point here is.

Yes, getting an SSN is easy (just find an on-campus job), but cashing out the $200k could lead to the OP being deported for earning an income without proper work authorization.

If you get an SSN, you are still only allowed to receive an income from authorized jobs/sources. On-campus jobs are one of them. But a self-run online business, does not count as one -- unless you get it authorized via OPT (or some other means.)

> Generally, that's impossible

It is indeed possible to work for your own company while on F-1 OPT status. I've explained it in detail on this thread: https://news.ycombinator.com/item?id=5191832 (which I referred to in the grandparent comment).

I should add, "incorporate a sole-proprietorship" is a non sequitur. The term "incorporate" by definition describes the act of forming a corporation. A sole-proprietorship is when you operate a business on your own name, and not under a company's name. It does not give you the "liability shield" that a corporation or LLC provides, and is generally a bad idea for most businesses.


I'm sorry I've missed your point too, let's say he against all odds now magically got a pre-completion OPT authorized (which takes A LOT OF persuasion of the school officials BTW), an EAD, and have enough money to get a lawyer and incorporate a C-corp or what have you, before Immigration gets to him, now what? He still violated the rules to maintain his visa status.

If indeed he is in danger of being deported, how is ANY of your suggested action going to save him? He's running against time here, he can try to change his visa status, which Uncle Sam could find out about this and deny by the way. But if he was successful, Immigration could still decide to immediate terminate his visa when they find out about this. He is under risk of being deported, whatever he does now might alert Immigration, which puts him under further risk of being deported. I'm sorry I've totally missed your point here, but wouldn't minimizing damage the best course of action under these circumstances? What's the best way to minimize damage? Oh right, getting his money back, transfer it out of the country and hope Uncle Sam doesn't find out, or do absolutely nothing and hope Uncle Sam doesn't find out and still have money to go to school.

OP said he's from Venezuela, did you hear they just decided to devalue their currency by a third? Assuming he doesn't get his money back, his family suddenly has to pay 150% of tuition before devaluation for him to stay in school in the US. I don't know about his financial situation, but sounds like a lot of burden to me. Tuition and living expenses for international students currently range in about $100K a year. Minimizing damage sounds like the best course of action here.


>Even on an H-1B doing what the OP did would be a violation of status

Could you expand on this? Do you mean an H-1B doesn't let you sell things online?


I'm no lawyer, but I bet the issue is that the US will want him to pay taxes on that income and has no way to do so at present.

http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

Perhaps the obvious answer is to find a way to convince the government to let him pay the $50,600 in taxes he would owe on that $200k of income if he were a citizen with a SSN...


Isn't that the job of the IRS? What does PayPal have to do with that?


Paypal has to report these things over a certain amount


But they don't have to police it. And they shouldn't.


Sorry, did you just suggest that a payment processor should not be required to ensure that when they hand money out, it's done legally?


There's a vast difference between reporting and freezing. Besides which, if I pay my taxes, in no way will PayPal ever be involved.


> There's a vast difference between reporting and freezing.

Yes, there is. For example, one is legal in this situation, and the other isn't. So, I'm still a little confused.

Is your position that PayPal should illegally pay money out, then report it?


It is not my position, in fact it's not even relevant to the issue that's being discussed. The original poster said that "the US will want him to pay taxes on that income and has no way to do so at present", so are therefore making PayPal collect on their behalf by freezing their funds.

My position is that it's not PayPal's role to freeze accounts without the specific guidance of the IRS. It's also not PayPal's business how the individual pays his taxes - he may decide to take the entire amount out of the account and then pay it in cash to the IRS. It's not up to PayPal to freeze the entire sum of money because the IRS wants their cut.


I don't know why you got down voted, I'd be interested hearing why that person disagreed with you!


What, so PayPal allowed him to use their service with a Social Security number, then they take his money because he doesn't have one?

PayPal is the one at fault here. Don't let someone use your service without adequate ID. Tell them and require it before you can use the service.


You can deposit the funds without any tax details or linking any bank account. But you cannot withdraw it without one.

If transferring money without SSN is illegal; I wonder how collecting it without one would be legal.


Transferring under $600 a year without an SSN is entirely legal. That's money considered too small to be worth taxing.

One place an American can usually quite easily check this is at your local gambling area. They are locked by the same rules. If you win big at the horse races, you don't get to take your money until you fill out tax paperwork.

This is no different, except that OP is international, and didn't know our rules as a result.


Then PayPal should make this very, very clear. In fact, I'd go further: they should mandate that you provide an SSN before you can collect money. It's unethical to do otherwise: anyone who uses PayPal to collect money will want to withdraw it.


One, PayPal does make their rules very clear. It isn't PayPal's fault that its users don't bother to read the rules.

Two, these rules do not come from PayPal; they come from the US Federal Government.

Three, the thing you're saying they should make clear is something someone else guessed about, and it's not correct. As long as the number is under $600 a year, there's no paperwork required.

I don't understand why we're all panicking so hard about a set of guesses that people have made. If you just think the situation over a little bit, it's pretty obvious that what's really going on is OP hasn't finished his free tax paperwork, and that PayPal can't hand out money until the tax situation is made legal.

And when you look at it that way, PayPal is actually doing exactly the right thing.


Yet they asked him for his SSN. They didn't ask for him to fill in his "tax paperwork".

I'm very interested in what tax laws you believe he's broken though.


Paypal has no incentive here. They can just float the cash and earn a small % on it. Do it to enough people and you understand how they make a lot of money.


They're killing their brand with badwill though.


> What, so PayPal allowed him to use their service with a Social Security number, then they take his money because he doesn't have one?

No. You don't need an SSN as long as it's less than $600 a year. This was correct.

His money hasn't been taken; they just won't disburse it until he does his free paperwork, as required by the US Government. That's entirely legitimate.

.

> PayPal is the one at fault here. Don't let someone use your service without adequate ID.

They did not. When OP does the rest of what he's supposed to do, he's going to have his money unlocked.

PayPal is being as liberal, correctly, as the law permits.

.

> Tell them and require it before you can use the service.

Yeah, they did. Maybe you should read the user agreement of a system before using it to collect nearly a quarter million dollars internationally. It's only three pages.

There is a point at which OP had a responsibility, too.


> His money hasn't been taken; they just won't disburse it until he does his free paperwork, as required by the US Government. That's entirely legitimate.

Half of it will be taken by the U.S government, that's likely the reason his paypal account got locked.

There is nothing legitimate about theft, whether its paypal or the IRS stealing his money.

> Yeah, they did. Maybe you should read the user agreement of a system before using it to collect nearly a quarter million dollars internationally. It's only three pages. There is a point at which OP had a responsibility, too.

He earned that quarter million dollars providing a service other people found useful. There is no justification for any organization or government to take any of it away from him.


>Half of it will be taken by the U.S government, that's likely the reason his paypal account got locked.

Yes, that's called taxes. There's nothing wrong with that. Also, the correct number is likely quite a bit lower.

Venezuela's going to take more than the US does.

.

> There is nothing legitimate about theft, whether its paypal or the IRS stealing his money.

It's really hard to take you seriously when you pretend that taxes are theft, and that the IRS is stealing.

.

> There is no justification for any organization or government to take any of it away from him.

Uh huh.


>Yes, that's called taxes. There's nothing wrong with that. Also, the correct number is likely quite a bit lower.

Taxes are usually filed by a specific time. Taxes are not taken at an arbitrary time, after an arbitrary amount of money is collected. Which appears to be what is happening here.

It seems to me that all this talk about taxes is wrong - it sounds like PayPal's insane money laundering hair trigger got invoked, and they froze the money. Now they are asking for paperwork or ID (a Social Security Number) that cannot be provided because the one who collected the money is not a U.S. citizen.

That's holding the man over a barrel.

Please count me out of any talk that taxes are illegal though. That's about the most ridiculous position anyone can take.


> Yes, that's called taxes. There's nothing wrong with that.

Of course there is.

> It's really hard to take you seriously when you pretend that taxes are theft, and that the IRS is stealing.

It's hard to take me seriously because I assert that its theft when one group of people threatens another with violence unless they give them their money?

What gives governments the right to take whatever they want from anybody?


Looking at taxes as a partnership is more appropriate. The government sets up systems that help you make a good business, for example a good financial system, a good law and order system, good infrastructure etc. These things help you make the money. So the government is a partner with anyone who uses these infrastructure to make money and in this partnership there is a sharing of profit which can be understood as taxes.


That would be fine if it were voluntary. But you cannot opt out. If you try to opt out, you go to jail.

I didn't ask the government to do any of that for me, and I would prefer they didn't. I can't fix someones car without telling them, and then demand payment.

Our government has done a terrible job at infrastructure and I hardly find it unreasonable to believe that I should be allowed to hire people I choose for my needs.

If I wanted an exciting life full of collapsing bridges, sinkholes, and trigger happy police, I would gladly hire government. I'm dull though. I prefer things to work the way I expect them to, no surprises for me please.


You can opt out. Renounce your citizenship.


Do you think its reasonable that government takes less from you if you commit suicide than if you renounce your citizenship?

I never agreed to be a citizen in the first place. Why should anyone have to give up everything they have just because the government decided to auto enroll them into a system without their consent?


You didn't ask to be born. Humanity has done an absolutely terrible job of managing this planet. It's not fair that people have no say about being born into it.


Only a very small fraction of tax revenues are applied toward this helpful infrastructure. The majority is used to fund useless wars and other special interest groups - hardly a mutual partnership.


They won't keep his money in any case, they'll either hold it until the buyers can no-longer reverse the charges (at which point they'll release it to the OP and close his account) or they'll refund it to the people who paid into the account.


You definitely should use WePay since it's FDIC insured.


Concur with javajosh's recommendation to find a California/USA-based lawyer for help. Advice from semi-anonymous strangers in internet forums is worth what you pay for it.

Generally, in the search for a lawyer, you get to talk to many (without charge) for 15-45 minutes each. You may be surprised how widely their estimations of the issues vary -- the law is the law, right? -- but you'll learn something from each conversation, and perhaps find someone you trust with your concerns. Also, legal confidentiality means that even if you've messed up on some tax/immigration/work-authorization/business things, talking with them honestly doesn't mean you've made any admissions that get back to the authorities (unless and until with their advice you decide that's the best course).

If a student in the US, your educational institution may also have a legal aid clinic.

You can probably get an 'ITIN', the equivalent to a Social Security Number for non-domestic individuals/entities who need an SSN-like number for tax/financial reporting purposes. See...

http://en.wikipedia.org/wiki/Individual_Taxpayer_Identificat...

...and the related IRS pages. And again, just getting the number isn't admitting to anything or any tax liability. However, it then will be used by financial institutions (like PayPal) to maintain their internal and government-required reporting requirements. Separate from just tax issues, amounts in the tens-of-thousands (and sometimes less) are subject to reporting to control money-laundering from large-scale illegal activities.


Unfortunately, while a lawyer can certainly make a request to PayPal, their user agreements are loud and clear on the issue of freezing accounts. Essentially, you agree that they can close your account and hold your funds for any reason or no reason at all. The freeze can last for up to 180 days from the date of your last chargeback, or from the date they froze the account, whichever is later. As you can see, they apply this policy liberally and always to their benefit.

TBH, you have already played your best card by getting this to the front page of Hacker News. You may well get your money released relatively soon because someone at PP has or will soon see this. It's sad that this is what it takes just to make them be honest, but that is what you get when you deal with PayPal.

Good luck, and never use Paypal again. Use Bitcoins or Stripe.


PayPal has a bad rep, but I think you're reading more arbitrary malice into the situation than is in evidence.

OP specifically reports that PayPal froze the account because he couldn't provide a necessary tax-reporting number. Getting the necessary number, and passing it to PayPal, may be all that is required. Talking to lawyers will just help the OP understand the situation... the lawyer may never need to communicate with PayPal at all.


> Unfortunately, while a lawyer can certainly make a request to PayPal, their user agreements are loud and clear on the issue of freezing accounts. Essentially, you agree that they can close your account and hold your funds for any reason or no reason at all.

Every lawyer I have ever talked to formally or informally have said such things may be challengeable in court. That's why you want to talk to a lawyer.

> The freeze can last for up to 180 days from the date of your last chargeback, or from the date they froze the account, whichever is later.

Again quite true. If it is only 180 days though, that's one thing, but only to the point they are reasonable (again talk to a lawyer). If they hold onto it indefinitely that is theft.

> Good luck, and never use Paypal again. Use Bitcoins or Stripe.

Yep. Use anything else.


>> Unfortunately, while a lawyer can certainly make a request to PayPal, their user agreements are loud and clear on the issue of freezing accounts. Essentially, you agree that they can close your account and hold your funds for any reason or no reason at all.

> Every lawyer I have ever talked to formally or informally have said such things may be challengeable in court. That's why you want to talk to a lawyer.

It's because it's what's called an unenforceable contract [1], because if they close the account for any reason, that reason could be because you are selling some goods, but PayPal doesn't like it. A court shouldn't uphold that, and I'd love to see PayPal be brought to task by someone with enough money, time and anger that they pursue a lawsuit to it's logical conclusion.

1. http://en.wikipedia.org/wiki/Unenforceable


legal confidentiality means...

IANAL, but I don't believe you have attorney-client privilege until you formally hire the lawyer. So if you are calling ten lawyers and getting advice, there is no guarantee of privilege.


Pretty sure that's not correct.

It would destroy the potential for candid consultations to determine whether a case should be taken.

From the attorney's perspective, the inability to guarantee privilege might cause them to incorrectly advise a client on their potential to help.


Yes. I remember OJ Simpson's first lawyer refused the case. Didn't talk about the conversation and wasn't compelled to. But it was clear he refused the case because of the conversation.


According to the lawyer across the table, privilege starts with the first conversation.


Interesting BUT what if the lawyer has a conflict of interest and learns that during the initial conversation before committing to representing you. Does that mean he/she cannot use the information you provided to defend the interest he currently represents assuming he refused to represent you?


Yes. The lawyer is obligated to keep that information confidential, unless you explicity release confidentiality.

As soon as the lawyer realizes there's a conflict, which will often be fairly obvious, they're supposed to stop and explain the situation to whatever degree appropriate.


In Massachusetts it starts when you pay any amount of money.


Do you have a reference? This page of the Massachusetts Bar, like other more general discussions, suggests it also applies for any 'potential' or 'prospective' client:

http://www.massbar.org/publications/massachusetts-law-review...


From your comments, you had multiple PayPal accounts (disallowed), were in Venezuela, using a US PayPal account, then transferring the funds to a PayPal account in Venezuela, and can't provide a tax ID for the US account. At the same time, you went from zero to hundreds of thousands in payments in just a few months. To PayPal, you likely appear to be a criminal involved in some type of money laundering or tax evasion scheme. I don't know enough about student Visas and international tax agreements to say you aren't actually engaging in tax evasion, perhaps unknowingly.

It's not surprising they locked the account and asked for documentation. The tax code pretty much guarantees they would within a year in order to file the 1099-K on your account. This stuff is serious to them, both from a financial (the potential losses if this money disappears because it's not been moving legally) and regulatory fronts (US Patriot Act among others requires banks, like those underwriting your US PayPal account, to be able to accurately identify their customers). This might not be easy to fix.


Thanks, I had never heard of a 1099-K before.

In case others are curious, here's a description of what it is:

"Due to the rise of of people making money with the help of the Internet, the 1099-K has been introduced. For the most part, the 1099-K is meant to ensure that income made from power sellers on sites like eBay is properly reported. The 1099-K is issued by third party payment processors, including banks and non-bank services like PayPal. So, if you use eBay to earn money selling, your transactions, processed through PayPal, will be reflected on the 1099-K issued by PayPal."[1]

[1] http://cashmoneylife.com/1099-k-form-reporting-requirements


This was a problem for me while moving. I had to completely delete my US paypal account and only then was I able to open another account in an international address. There was no simple way to 'migrate' the account or add another card with an international address.


Sorry to hear about the troubles :(

If this wasn't the umpteenth time I've heard this story, I wouldn't say this so pesteringly:

To everyone: Stop stop stop stop stop using PayPal. This happens over and over again. For once, thankfully, there are viable alternatives out there -- Stripe & WePay to name two (both of which I've had excellent experiences with).

Not saying they're panaceas or that there won't be security/freezing issues from the new guys, but PayPal has a documented, extensive, and repeated history of freezing accounts with large amounts of money in them over short(ish) periods of time.


If you have to use PayPal: regularly transfer any money to an actual bank with actual responsibilities, not some fake holding bank registered in Ireland or whatever PayPal is using today to evade tax and consumer laws.

You are not getting interest by letting that money sit with PayPal.


You're also not getting principal by letting that money sit with PayPal.


I think you flipped principal and interest there.


Principal in this case is the money that you earn interest on. He doesn't have either.


He may have flipped principal and principle...


No, he's also not getting any principal. It's frozen.


PayPal allows itself to pull money out of a bank account associated with the account as required.


Yes. The real solution is to have two separate, linked bank accounts, only link one of them to PayPal. Set PayPal to sweep into bank account A daily, and then have your bank set up an automatic sweep from account A to B either daily or as it reaches a threshold.

However, even if you don't do this, PayPal transactions are via ACH (actually, this isn't a PayPal-only thing - technically anyone with your ACH account info (the stuff at the bottom of your checks!!) can push/pull money into/from your account, it's the nature of the beast) and that has many failsafes and undos available, though it is a real PITA.


I don't think paypal is the problem here, this is a pretty clearcut case of not having ones ducks in a row before doing business.

People shouldn't expect that you can run a business as though it were a lemonade stand and funnel hundreds of thousands of dollars through any processor, including paypal, without anyone taking notice. That's not the way banks work, it's not the way the law works.

Get a business license, get your ducks in a row, make sure you read the terms of use, make sure you understand the legal implications of the business you are conducting, and then proceed accordingly. If you run into problems with a bank, a processor, or whomever then go consult someone who knows the law far better and can act on your behalf (e.g. a lawyer).

This is the exact same advice whether you use stripe or paypal or authorize.net or what-have-you.

If your business operations are indistinguishable from fraud or money laundering on the surface then you should not be surprised if your accounts get frozen and you should ask yourself how you need to go about making sure there is a perceivable difference.

Perhaps one could argue that the law or banking regulations or the corporate policies of the most popular services were different, but that's the world we live in. And it's not because they are trying to be assholes, it's because fraud and money laundering are commonplace, and if these companies don't try to keep it in check then they will get shut down by the government or the fees you pay to use the service will be much higher.


> And it's not because they are trying to be assholes, it's because fraud and money laundering are commonplace

Actually, in large part, they are just being greedy assholes that are doing this because they can get away with it, and because it is profitable. They largely invented the freezing game, and they know how profitable it is.

Of course fraud and money laundering are issues, however that is far from the OP's use case. Before they freeze hundreds of thousands of dollars, you would think they would at least look at his site for a few minutes.


What part of the law requires they look at his site? What part of having a really spiffy site on the internet instantly translates into someone running a legitimate company rather than a shell corporation?

To be frank, you're talking out of your ass here. You have no idea of the problems that paypal is facing, and you are imaging that frozen funds are somehow identical to profit for paypal. That's not the case at all. In reality paypal has to deal with a veritable army of fraudsters and organized crime members on a daily basis. And they are hugely sophisticated, well funded, and impressively capable. Paypal's successes against such folks happen in the dark, because typically these guys aren't going to go blogging and tweeting up a storm about how paypal shut down their international money laundering operation. But it happens all the time. And that's why paypal is often so aggressive in these cases. Because they've seen the "clueless international student with a side-business and no paperwork but a really fancy website" gambit played out a thousand times already. How do you tell the difference?

Easy, when the legitimate operation goes and gets its legal issues sorted out, gets a business license, gets a tax ID, EID, inputs an SSN, etc. and sorts out any other legal or ToS violations they have then paypal won't have a cause for freezing the funds anymore.

Now, you might say that we should change the rules, and make it easier for anyone and everyone to toss around hundreds of thousands of dollars across international borders without any documentation or the involvement of any sort of registered business entity. I'm somewhat sympathetic to such notions, but such changes would entail a plethora of complex and thorny ramifications that I think most people who implicitly hold such ideals almost certainly haven't thought through.

There is one complaint against paypal that is sensible and backed up by evidence, and that is that they often have crappy customer service. That does indeed suck, and it aggravates these sorts of situations beyond a level that is reasonable, and, of course, generates a lot of antipathy toward paypal that isn't fully warranted.

If people want to switch to paypal alternatives, they are certainly able to try. Of course, one wonders why there are so few which have a global reach and the convenience of paypal. It couldn't be that the problem of peer-to-peer international payments is at its core fundamentally quite difficult and that only one company has done the immensely challenging work to actually make it possible, could it?

Surely not.

Paypal sux.


>What part of the law requires they look at his site?

This is not a legal issue. The law is on PayPal's side because of their draconian legal agreements. The freezes are a customer service issue, at least from the customer perspective. They are a profit mechanism from PayPal's perspective, and they don't really care about the customer service aspect because they have managed to flourish despite a horrific reputation.

If I still used PayPal for my payment processing, I'd sleep like a baby: I'd wake up crying every two hours.


In many cases, Paypal is complying with the law, not the other way around. Paypal spends a lot of time/money on risk management. If they see a lot of money being funneled into the US, they are required to report and/or take action. It's as simple as that.

My business account just got similarly flagged and we provided all necessary documentation that proves we are a real business. They removed the flag in 24 hours.


So if they don't look at his site, or his business, then how do they know he's a money launderer?

The problem is not that they freeze accounts, but there is no recourse to appeal. They require ID after freezing the account, but they should get this before setting up the account. If they are so upset about fraudsters, then I'd have thought they would attempt to ascertain the identity of their patrons before getting their knickers in a twist that their patrons aren't identified fully.


At small volumes it's not practical for paypal to care about such risks, at large volumes things change.

Imagine this situation without any financial institutions involved. Say that you are a visiting student from Venezuela without a work visa has earned $200k in cash in the US and then packed that money into a briefcase and went to head back to Venezuela. That money would be 20 banded stacks of $100 bills. Imagine what happens when you go to cross the US border and proceed to casually declare that you have $200k in cash you are taking with you. You have no work visa, you have no tax ID number, you have no business license. All you have is a website and a pile of cash. How do you think that will go? What do you think would happen if you took $200k in cash to Western Union and asked about wiring all of it to Venezuela?

Our country has decided to push a level of responsibility for tracking illegal financial transactions and for tax evasion onto financial institutions. And that's what paypal is doing here. They aren't doing it because it somehow makes them richer to have this money frozen for a while, that's at best a tiny effect. They are doing it because the alternative of ignoring fraud, tax dodging, and money laundering is that 1: chargeback rates go up, which will increase paypal's financial losses and could cause credit card processors to increase the rate they charge paypal for transactions, 2: governments confiscate the funds, 3: governments don't allow paypal to operate there.

The idea that there is some big mean paypal asshole twirling his mustache and waiting for an opportunity to screw over some hard working paypal user and steal their money is a very seductive one but it is massively wrong. The reality is that paypal has an enormously difficult job and sometimes good people get caught up in the complications.

The idea that someone can set up an international business and earn $200k in less than a year and somehow expect that operating without any documentation or having to go through any legal hoops is extraordinarily naive.


Personally, I think the law is outdated and poor if pretty much anybody can run afoul of the laws while being completely clueless and befuddled by them essentially on accident.


That's true, but it's hardly restricted to finance. That is a deep well.


PayPal also has over 100,000,000 users. Even if PayPal worked 99.999% of the time, you're talking thousands of problem cases.

Turn.js is awesome, I've been a fan of it for a while, and I hope and expect PayPal to resolve this.

But generalizing advice off this one data point is wrong. For the vast majority of people, PayPal is hands down the best choice.


Using a real bank is hands down the best choice.


As another foreign business owner taking payments from the US, I really wish I could. There is practically no alternative to it outside of US/Europe, and wire transfers are too much hassle, take too long and end up costing the same.

I do take my money out of PayPal as fast as I can.


There's actually a good alternative in Europe and so on: https://www.paymill.com/ it's basically like stripe.


This may be a non-starter for this gentleman. Both Stripe and WePay have SSN requirement of sorts:

https://stripe.com/us/help/faq#do-i-need-an-SSN

https://support.wepay.com/entries/313535-why-are-you-asking-...


I actually looking for a way to solve this future problem (located in Colombia). I wish I could use stripe or baintree. Opening a account in USA from my local bank requiere US 30.000 in the first deposit (!) and creating a US company (http://news.ycombinator.com/item?id=5148581) I worry for the legal/financial repercussions of that. The local payment processors suck worse than paypal. I use fastspring, they support my country, but can't use it for mobile payments (my requeriments). How badly this sucks...


As for opening an account, you could take a trip to Miami and open it by yourself. No need to be a resident. Then make withdrawals in Colombia from an ATM (up to 780k COP at once) at a not too bad exchange rate.


Yes, but then I need a TIN. And a US address to activate the stripe account. Creating a US LLC corporation is a big problem because the legal/tax implications... but probably my only rute right now...


Yea, this kind of general advice do not always apply in specific cases like this.


I think the lesson learned in all of these cases is don't leave tons of money sitting in your PayPal account. Link it to a bank account, turn on auto-sweep, and don't amass a huge balance that ultimately seems rather suspicious (whether it is or not doesn't matter).


Sad story, I agree with folks who say you should seek out legal advice.

HEADS UP FOR ANYONE ELSE CONSIDERING THIS:

If you are going to receive funds with PayPal and they are going to exceed the 'occasional sale' guidelines (which some people interpret to mean the same guidelines at the rule for sending an IRS 1099 form which is < $600 annually.

First establish your business presence in the US, that means creating an LLC, getting an EIN [1] and establishing a relationship with a US based bank.

If you get hung up on those steps, don't start taking money with PayPal because their zealous anti-fraud/laundering/drug program fires on a hair trigger. It didn't help that the OP is a student from Venezuela which is not one of America's trading partners.

I expect you will lose most of this money in legal fees. However, if the business is durable, and you manage to establish your LLC (that lawyer you got can help with that) then you will make it back and PayPal will back down. As long as the money trail can be tracked and everyone in the path reports it to the Federal Government so that they are satisfied it isn't part of a laundering scheme[2], or if it was they can catch the folks involved, you will be ok.

[1] http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

[2] This is how the laundering scheme would work. Some criminal enterprise hires a bunch of third parties to buy your 'widget' for an inflated price, say $10,000 per copy. You sell the 20 copies, get the $200,000, now you go to a coffee shop owned by the criminal enterprise and buy a Double Vente Latte for $180,000 made out of hand picked coffee beans. The crook now has $180,000 of "legitimate" income from his coffee shop, you have $20,000 in "profits" on your amazing Javascript widget, and 20 drug dealers have a bit of software they just delete from their hard drive (if they down loaded it at all). Everybody "wins." So the US Government wants to be able to subpoena your customer list to track the money from the drug dealers to you and then back to the crooks. Paypal helps with that. If you make it hard for them to do that, they keep you money.


'It didn't help that the OP is a student from Venezuela which is not one of America's trading partners.'

A common misconception among Americans. Though understandable considering the state of diplomatic relations.

"The United States is Venezuela's most important trading partner. U.S. exports to Venezuela include machinery, organic chemicals, agricultural products, optical and medical instruments, autos and auto parts. Oil dominates U.S. imports from Venezuela, which is one of the top four suppliers of foreign oil to the United States. About 500 U.S. companies are represented in Venezuela. U.S. foreign direct investment in Venezuela is concentrated largely in the petroleum, manufacturing, and finance sectors."

http://www.state.gov/r/pa/ei/bgn/35766.htm


Thank you for that, I stand corrected.


>It didn't help that the OP is a student from Venezuela which is not one of America's trading partners.

It very much is. That's one reason for most of the anti-Venezuelan/Chavez propaganda: to get a puppet government like before to cut US companies better deals.


Here's a related question. PayPal is officially in my country. Can I take money from anyone in the world and receive it in under my country's law?


Yes, if PayPal does business in those countries.

There are some countries were you can pay but not receive funds and some where you can sell but can't keep any money in your PayPal account (it's automatically transfered every day to you local bank account).

PayPal wants to do business everywhere it can (that's how they make money) and modifies how it does business to meet the laws it must.

So, it can't do business in countries where the US prohibits it (see the OFAC list) as they're a US company and limits account functions where other laws require it.


You would need to read your country's law books, which may differ depending n whether you are from South Africa, Japan, Romania or anywhere else where you can use Paypal.


Another option might be to force paypal to refund money to your customers, and then once re-established, beg your customers to pay you into your new account. I suspect most will do so willingly.


When you say you're an international student, do you mean you're in the US on an F-1 visa? If yes, you might be in violation of your visa terms. If you have not researched this, please start reading at http://www.justanswer.com/immigration-law/330cd-holding-f-1-...


Wow, that's just...mind-numbingly awful. If that's true, the Emmanuel just forfeits all that money?

I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.


What part is mind-numbingly awful? It's pretty standard for countries to give out student visas with the proviso that the student cannot accept employment, or can only work up to (say) 15~20 hours a week after getting a special permit. As far as visa regulations in developed countries go, this one sounds fairly reasonable to me.

> I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.

I'd be very surprised if this argument were accepted, given that presumably a lot of OP's income came from US sources (if OP was temporarily in the US, AND was being paid from non-US sources, AND the total sum was not as high as 200 grand, then arguably the case would be in a gray area [1]). Otherwise, it would be too easy to enter the US on a tourist visa and work from home, coding or teaching $foo via Skype, but good luck explaining that to the immigration authorities on entry.

However, it's not clear whether OP was actually in the US when they were selling the licenses.

[1] http://www.nationofimmigrators.com/employment-based-immigrat...


IANAL (which is why the OP should definitely talk to one).

If the work that generated the income was done while he was physically in the US, then the immigration folks will definitely have an opinion on if it was legal under his visa terms. This may or may not have an impact on any potential legal remedies that are available wrt Paypal.


Yeah, as someone who has held an F1 in the past, the US authorities take a very dim view of getting income while you are here without authorization. I think actually committing misdemeanor crime is of less consequence to your legal status than taking money. We were warned about it very specifically.

I heard of someone who was deported because he was painting fences for some disposable income. My guess is that the OP actually needs an immigration lawyer, not a civil claims lawyer (or whatever they are called).

It's a sticky situation, and likely depends on whether the money was being posted to a PayPal account with a US or Venezuelan address/bank account, and whether he actually performed any work on turn.js while in the US. My guess is that if PayPal are asking for the SSN, he tied it to the USA, which is going to be a problem.


IANAL, and the OP should talk to one.

I'm working legally in the US (TN-1), but my wife is here without permission to work (TD-1) (and is not working). When I discussed her options with my immigration lawyer, like maybe should could remote-work for a company back home, my lawyer said (informally) that any work or any income, while in the US, was subject to immigration law. In fact, I was told US immigration's opinion is that when non-US citizens answer work email while on vacation in Hawai'i, it's technically illegal (although obviously everyone happily ignores that in practice).

What a surprise, countries are really no-fooling serious about protecting jobs for their own citizens.

So it's quite possible that in this case, Paypal had no legal alternative.


The other night there was something on CBC (Canadian Broadcasting Corp) about a Canadian guy visiting his wife/girlfriend in the US.

US Customs took his aside and was't going to let him pass (no surprise) but let him through but told him he could pass but he couldn't work in the US not even housework, not a joke.


AFAIK you can't work for US employer or perform services for US employer. Not sure that this covers outside of country services/work. This is meant to protect US jobs which you didn't take and that is a bottom line.


IANAL either, but there's no law against making income, there's a alw against accepting employment. If OP can show he created and sold his own product then that should not violate his visa constraints in any way. In any case, I've never heard of anyone having their income confiscated even if they were a candidate for deportation (though not a lawyer I follow immigration law very closely, it's a pet issue of mine).


There is a law against participating in a business. The only way you are allowed to earn an income is if it is an approved on-campus job.


That's only true for a student in their first academic year, but since we don't really know the OP's specific situation I don't want to get into an argument about details. http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b...


Even in the years after the first, the "jobs" have to be related to your course work ergo "practical training" i.e. internships with some company. There is no allowance for running your own business anywhere at anytime. I maybe wrong if laws have changed. Please point to something that says it's ok to run a business. Thanks.

[URL=http://www.youtube.com/watch?v=J9Ht92B3WaM ]youtube downloader mp3[/URL]


The (possible) immigration issue and the Paypal-locked-my-account issue are somewhat tangential. The money's (probably) not being held because of a visa issue. It's being held because it looks suspicious.

BUT, let's say OP gets a lawyer and starts exchanging nasty letters with Paypal. Any Paypal lawyer worth his salt is going to quickly say "Hmm, you're a student? Does your visa situation allow you to earn money in the US, or was this income generated illegally? Let's ask USCIS for their expert opinions. By the way, you do realize they can deport you, right? Are you SURE you want to continue down this road?"


I agree entirely that they're almost certainly tangential. I generally agree with the line of your argument.

But you're being nasty about Paypal, and I very much doubt the implication. I'll bet you 10:1 that Paypal would rather give him his money. But they also want to be in compliance with the law. They also want to spend the least they can on policy-vio detection and fraud detection ("least they can" means "a hell of a lot", say my professional connections; they're serious about fraud), and the least they can on customer service, and have minimal PR consequences.

It's not like they get to keep the money if they decide it's not legal to move it; they have to give it back, or pass it on. They'd rather pass it on and have more future business, from which they can take their cut. But they won't flagrantly break the law to do it, and they can't spend infinite resources making sure the right thing happens in every single case.


PayPal doesn't give a shit about claiming the money for the government and they damn sure don't care about his immigration status. They just don't want to get ripped off.


As I said, if lawyers get involved Paypal will care very much about his immigration status. If his visa doesn't allow making money while in the US, he's just handed Paypal's counsel a very big stick with which to make him go away.


In this world, one must be born rich...


It makes it easier, but it could also be said that you should have checked the Terms and Services contract with Paypal.


I started my commercial project in Venezuela, but using a U.S. account.


I was an F-1 student too, and here's my suggestion:

This coming Summer, apply for pre-completion OPT.

You are allowed to start a company (register a corporation), and work for it under OPT status. I have inquired about this on HN before: https://news.ycombinator.com/item?id=1523021 I also verified with the DSOs (Designated School Officials) at my university, who are authorized to give legal advice on this matter, and they said that it was indeed possible to be self-employed / do a startup while on OPT.

What you should do is:

1. Apply for pre-completion OPT right away. Once you get your EAD (it'll have a start date on it), register for a C-Corporation after the start date. (Unfortunately, non-citizens cannot start S-Corps, which are actually more suited to startups).

2. Then get a bank account on the company's name; link that account to your PayPal account, and cash the money to the company's bank account. You can then pay yourself a lump-some "salary" or cash it out via stock dividends.

3. Since your pre-completion OPT is authorized only for the summer, you'll have to stop "working for your company" at the end of the OPT period. So that this doesn't bite you again, in the meanwhile you should find a different solution to charging customers such as an international PayPal account or some other payment solution that is not based in the US.

4. Once you graduate, you'll be able to work for you company for atleast 12 months; and if you have a STEM degree (Comp Sci counts as one), you can work for it for an additional 17 months (adding up to a total of 29 months). After that there really aren't any other visas for startups / being self-employed, as the H1B requires that you own less than 50% of the company employing you (the real issue is that "you are not in control of your employment" and that you're fireable -- so even substantial ownership under 50% might be problematic -- but IANAL and I don't know about this. It might indeed be possible to do a startup on an H1B with 3 co-founders. Check with a lawyer.)

5. After the 29 months of post-completion OPT, if you are not particularly attached to the United States, there are many countries that welcome startups and self-employed freelancers and issue visas for such people. One such place is Dubai, a modern metropolitan city with people from various backgrounds. The DTMFZA (Dubai Technology and Media Free Zone Authority) issues Freelance permits (for $3k/year) that let you be self-employed in the country. One of the great things about Dubai (and the UAE in general) are the zero taxes. To top it all, Dubai happens to be a really great city. Other options, perhaps include Singapore and other cities/countries, but I don't know about the immigration/visa deal for freelancers in those countries.

Good luck! If you have any further questions, feel free to reply to this thread -- I'll be monitoring it.


You cannot do both 12 months of pre-completion and 12 months of post-completion OPT, you only get 12 months of OPT per degree level


Yes, you're right. So if the OP works for 3 months this summer, he can still do 9 months of post-completion + 17 months if he has a STEM degree.


can only do STEM is he works for an e-verified company, STEM is tougher to get for people running their own business


Just want to add, OPT (both pre-completion and post-completion) applications will take around 3 months to process; so you should get the paperwork in right now in order to get your OPT authorized (and receive your EAD card) by mid/late May.

Until then, hopefully you can trust PayPal to hold onto your funds (and not gobble it up for some stupid reason).


You can work for your own company on post completion OPT as well? I'm currently doing it on pre-OPT, but didn't know it was possible. Do you have the same "continous work requirement" as normal employment under post-completion OPT?


> Do you have the same "continous work requirement" as normal employment under post-completion OPT?

If by that you're referring to the rule that mandates you maintain minimal periods of unemployment; Yes.

Since you're running your own company, as long as you don't fire yourself you should fulfill this requirement.

The F-1 OPT status allows for upto 60 days of unemployment though. This means that means if you were to work a regular job, you still do have a little gaps of time in between switching jobs to search for a new job.


Good advice. But also, get a lawyer!


Apply for a TIN - taxpayer identification number. PayPal can use it in lieu of an SSN. This will take you six weeks. In the alternative, consult a local lawyer and have them nastygram Paypal for you.


If he's an international student, he's only allowed to work on campus. If he gets a US tax ID and files income under that, his library sales will count as off-campus income (I think?). So I'm not sure if this is an option. Of course, IANAL.


But that depends. I would suggest talking with an immigration lawyer. Surely the fact that such is non-tangible sales over the internet should allow some reasonable solution.

I have founded businesses with people from other countries and I have never had trouble with immigration laws provided that people weren't doing billable labor for customers in countries where they weren't supposed to.


Incorporation and a TIN takes ~24 hours these days.


I am not sure what the process looks like for legal persons, but from recent experience inquiring about and gathering paperwork to get my wife (a Japanese citizen) an ITIN, I was quoted six weeks by multiple authoritative sources, including my accountant and the IRS.


You have $200k sitting in your paypal account? Don't you have a bank account? What country are you in? What exactly did they say to you? How you mean you 'don't know how' you made $200k - you didn't expect to sell so much, or you sold $200k in one go with no idea who gave it to you? This seriously needs more information.


It's always a shame stories like this get so much attention. Lots of 'PayPal is evil' comments. A completely one sided 'I'm so innocent I didn't understand' perspective. All companies have issues once in awhile. I get that people are especially sensitive with PayPal because they deal with money and are huge. But come on. If you at all expect to be making more than even a few hundred dollars a month there's an onus on the 'victim' to read up on what they're doing and set things up in an appropriate manner. This situation sucks but it'd be nice if there was a balanced view on it and more helpful dialogue than 'Never use them! Go to court!'


I'd guess it's more like 2-20K, but if it were only that much would HN have discussed it?


Hey Emmanuel - Saumil Mehta here from LocBox, we spoke a few months ago on the phone.

I would urge you to simply hire an excellent immigration lawyer to figure out your options w.r.t. the F-1 before you move forward. I have a San Francisco-based firm that I can refer you to if you like. They are (somewhat) expensive but they do deliver good results and they are not a big faceless firm - fast, efficient, get on the phone quickly.

Email me if you want to talk more. FWIW, I dealt with our dysfunctional immigration system for a decade - once having to forfeit a well-paying internship after forgetting to file a dumb piece of paperwork - so I do understand the pain of getting the shaft after busting ass, primarily because of immigration reasons.

Anyhow, hope this helps.


I think there is a problem here. If you are saying you do not how how you made it then there might be truly something wrong with your account. It is rare for any open source project that is a js widget essentially to pull in 200k in six months. I think there is a bit more information at work here and you are leaving it out. I think what Paypal did was justified while they investigate what is going on.


When I said, I didn't know how I was referring to the fact that I never expected that.

I started turn.js as a weekend hack with html5. Then, I showed it on HN and asked for a Job. Later, I went to some tech company, I didn't get forward for whatever reasons. Turn.js was initially MIT licensed, and I had literally no money. However, some people were making 30k or more selling my javascript on some marketplaces, so I decided to stop and get back my credits. I created a commercial license, and everything started to change. I never enjoyed my money, I came to the U.S. because I needed a degree...


Contact one of the Silicon Valley law firms that's used to dealing with these things. Don't go to some cheapo ambulance chasing lawyer who doesn't know what to do. Even if you cough up $20k in fees to a law firm it's worth doing. They'll help you set up a company for your product and steer everything through that to unlock your funds. A lot of advice on here is overly negative and misinformed. As someone who has had to deal with changes of legal status, setting up companies as a foreigner, and has dealt with the hell of PayPal account freezing, I can assure you this is fixable if you work with a reputable experienced law firm.


Disclaimer: I have a love hate relationship with Paypal. My organization runs most of our payment processes through Paypal.

With that said, some questions:

1) How were you able to process 30k/month through Paypal out of the gate without providing a government ID?

2) How much of the 200K were you able to withdrawal? If any? Do you have any of it in cash?

3) Did you experience an abnormal amount of chargebacks?

I'd love to hear your thoughts.....


33K while I was in Venezuela. I had an old U.S. account, so I wanted to change it to Venezuela. My PayPal U.S. account had crazy address like: Avenida GRGRGR, Estado GRGR, United States. They said to me, you can't change the country, so you should create a new account. I did that, but once I noticed less features in PayPal Venezuela, I decided to keep the same code in my website and move the money from the U.S. account to the Venezuela account. I have 1% or less of chargebacks. My customers are happy.


You should lawyer up. Having multiple accounts with intentionally fake adresses and this sum of money may be illegal and punishable according to money laundering laws; and the business may get you thrown out of USA permanently due to visa violation - so you need to protect yourself.


First, before you do anything else, find a reputable payment provider and switch your payment mechanisms over to that, so you don't keep getting money sent into a locked account. And with your new payment provider, make sure you sweep all money you receive out of any account they have access to as soon as possible, up to whatever limits they have on how much you have to leave around for chargebacks and similar.

I'd guess that PayPal wants an SSN so they can report your revenue to the IRS for taxes. If so, they might accept an EIN or TIN instead, which you can obtain as a business (which you probably want anyway if you plan on doing that much business).

Alternatively, if you are not actually in the U.S. (you didn't say explicitly), you may need the local equivalent instead, though good luck getting PayPal to accept anything that doesn't follow their script.

In any case, the instant you get access to your PayPal account again, get all the money out of it before they change their mind, which they frequently do, and switch over to the reputable payment provider you picked in step 1.

Finally, next time you start doing business with a service, even a popular one, search for negative experiences with that service and take them seriously. You now know not to use PayPal ever again, but that still leaves quite a few other services out there to get burned by.


I believe this is correct. I got a similar notice, even though I'm Canadian and charge mainly for services rendered in Canada.

OP, it takes a little while to get a TIN, but it's pretty straightforward to do so. You can get this as a foreigner, even if you're not in the US.

I recommend contacting the IRS to see how to do this. They have a competent international division. A phone call to paypal to see what they require probably couldn't hurt, but you can never be sure with them.


An International Student is unlikely to have a visa that allows them to start a company in the US.


You do not have to have a visa to start a company in US. Actually, you can start one without even being in US. Opening bank account for such company - is what tricky without being physically in US.


He didn't started a company anyway. Selling old clothes and old toys in ebay doesn't make us a company, does it ?! What if we sold $200k worth in old toys ?! Paypal would take our money anyway...


Yes, selling old clothes and toys on eBay makes you a business. If you do it under your own name, you are a sole proprietorship. In the US, your business (the sole proprietorship) will attach a Schedule C reporting its business income (the proceeds of those eBay sales) with your federal tax return. If you sold $200k worth of old toys, PayPal would ensure the IRS knows you owe taxes as it'd report the income on a Form 1099-K, as they're required to do for any account holder with over $20k in annual sales.


No, PayPal would ask for your ssn to make sure you're paying the taxes on the 200k you just made. Yes, if you sell 200k in old toys on eBay, you owe the IRS a pile of money.


why ? I thought you pay tax by residence in most cases. I know when I worked in US I elected to pay taxes in Canada because I wasn't moving to states (there is tax treaty)


I'm assuming you're selling the toys in the US. If you're selling them in somewhereelseistan, then you probably don't have a US paypal account and none of this matters. Unless you are using a US paypal account, in which case, whoopsie, should have sorted that out ahead of time. Don't funnel money through a country if you're not doing business in that country.


So, I bought new toys and had to pay tax. After some years I decide to sell it, I need to pay taxes for my old stuff ?!?!


Yes, but only on the amount you profited.

If you buy $1000 of toys and then sell them on eBay for $200 later, then you won't owe tax because you had a loss of $800. However, if you were audited, you might have to prove that the toys originally cost you $1000. If this is the only unusual item on your return, it's unlikely that an auditor will bother with it.

However, if you went to, e.g., China and bought $200 of toys and came back to the US and sold them for $1000, then you will have to pay tax on the $800 of profit.


Yes, sales tax and income tax are two different things.


I've been testing turn.js v3 for personal projects and am seriously considering buying it for production use in a business; it's the only thing out there for dynamically-rendered flipbooks. Sorry to hear about your troubles. At that level of revenue, I'd seriously consider charging using something like Stripe or Braintree. Your target audience (developers) won't consider typing a CC number as such a huge inconvenience.

Another note - releasing the 4th release's source code under something like the Affero GPL (or a similar noncommercial license) could drive adoption of that version, since many people like to "try before they buy" - and would like to do so with the most feature-filled version.


Thanks for your feedback.


Maybe make it work using a different bank system and IBAN payments IBAN is international, you might consider opening a IBAN acount in Venezuela. I'm in europe and i like Ideal much more then paypall. As "Ideal" is much more secure. Other options might be bitcoin, or maybe game dollars wich can be changed to hard valuta like lindendollars ...


Emmanuel, sorry this happened! We can fix it... I sent you an email with my PayPal email address and my cell phone (call/email if you wanna understand what might have happened here). I have also sent his thread off to folks within PP who can help lift/adjust the restriction. Should be sorted in no time, dont lose hope :)


You should talk to a lawyer immediately. You should also read up on just what exactly your visa allows you to do. Assuming you have an F-1 visa, you are pretty much (with some small exceptions), not allowed to work. This includes self-employment, freelancing, anything.

What you should have done (and this is still a legal uncertainty) is have the funds tied to a Venezuelan bank account, your Venezuelan personal and tax identification. It's a little late for that, however.

Best of luck retrieving your funds. I wouldn't be surprised if you got PayPal to release them (they are not themselves a government, so just require enough information to cover their own ass). But expect to be asked some very serious questions by USCIS. For that reason you don't want a regular lawyer, you main issue here will be trying to convince the US you weren't breaking your visa terms.

You need an immigration lawyer.


These sort of things generally revolve around tax reporting. As an international student, you should be able to get an ITIN or TCN which, I believe, they also accept.


I highly recommend contacting executiveoffice@paypal.com. I've had many problems with PayPal in the past, but they were the only group able to make corrections to my account and release funds.


Former administrator of an international student program, here. If you're an international student, you can work for the school (at least you could at mine). We used to give kids literally 1-hour careers sitting at a desk in our program at minimum wage so they could get social security cards. If you were to furnish Paypal with a valid ss#, could you then get your money? That's a lot of money. If your school won't do it, I'd work on tranfering your 1-20 to another school that will.


Hey Emmanuel, long time no speak.

I would suggest you go to a lawyer as well, I know how hard it is for us Venezuelans out there. I had a PayPal block once as well and managed to solve, it takes time and a lot of documentation, however it was not even close to the ammount you're mentioning here.

There are alternatives like creating your own company and giving the info of your company to PayPal, that way everything will be as legal as they might need.

Let me know how it goes, best of luck bro


So much for the kinder, gentler paypal.

http://money.cnn.com/2013/01/21/technology/paypal-frozen-fun...

I guess it was all talk.

Never, ever, keep more than $100 in a paypal account (or as much as you are willing to lose immediately, forever).

Also, if possible, close the bank account your paypal is tied to as they will draw from it as they see fit without your consent.


The kinder, gentler PayPal can't ignore the law, the tax code, or serious risks of criminal activity on its platform. They made a commitment to cut the red tape in the situations where it didn't make sense, not to throw out the rulebook and the rule of law. None of what happened here is inconsistent with their promise.

This situation isn't some innocent trinket seller whose account was frozen without reason and without recourse. It's a foreign national funneling six figures across borders through multiple anonymous PayPal accounts even after being advised, by PayPal directly, to stop doing so. Above and beyond the breach of contract and ignoring PayPal's guidance to stop using a US account when he's not a US citizen or even in the US, the activity looks pretty much exactly like money laundering. On top of that, PayPal has its own legal obligations to the United States, which it can't fulfill since he's not providing a tax ID while he's passed the IRS reporting threshold by a factor of 10.

They closed his US account, which they gave him warning he wasn't supposed to be using. He hasn't claimed they are keeping any of his money, and they didn't stonewall him about why it's being closed. Should they have allowed him to continue operating illegally forever?

My opinion of many people has dimmed as a result of the comments here. They say you can judge a person's character by how well they treat their waiter at a restaurant. In the startup world, how fast someone is to trot out a "PayPal is evil" comment whenever the company is mentioned, no matter the circumstances, might be a decent analogy.


Now we have paypal apologists and defenders.

I guess that's like how no-one can imagine cops as abusive and surely the person must have done something to deserve it.

I guess we'll have to wait until you are on the wrong side of paypal and then you can tell yourself you deserved it.

Ask yourself who gets to keep the $200k if he cannot jump through their hoops. Hint: it's not the government.


I faced a similar issue in past having a paypal account in UK. I fixed their ass as it was my own money and they had to pay me in 6months and then they closed my account. PAYPAL is actually becoming virtual beggars.

My question is simple as below:

Why do they let us accept payments as much as we want and when we make withdrawals that time they came to know we have bla bla information missing to be verified???????

Why they can not simply held/limit/block our paypal accounts on the very first transaction we receive so we make arrangements or leave using it???????

I have heard many many complaints where people's accounts got held due to verification pending etc but they all have one COMMON thing they only get their accounts blocked or held when the do withdrawals. Paypal the fucking beggars wait till we make money in our accounts by hard working and once we do withdrawals they make issue's. I believe paypal as a big time FRAUD itself. They should held our account or do not let us use it unless we have all the verifications done......... Do comment guy'ssss with LIKES or DISLIKES


Next time, ask for payment in Bitcoin, and avoid these outdated clumsy troublesome international payment law troubles in their entirety.


Why do people keep using Paypal ? Paypal is always taking money from people. Always! It's interesting what's going to happen here. If he can't get his money, is Paypal going to have it ? Why is there the assumption this guy is in the US ? Even if this guy was not legally in the US, this is still his money.

If you are young and don't have a national insurance number yet, ask them to change your account holder to one of your parents and give them the NI.

I'd basically create a website reporting this issue to the general public and attach all emails and information you can get from them. Also, I'd change the payment method in your website to something else LIKE RIGHT NOW! You should never, ever trust Paypal! Like NEVER!

You should also report this to the media, they will love it! $200K is a lot hell of money!


Like, we couldn't use a chunk of that 200K here in the US to fix our bulging deficit. This is why we have it.


The full $200,000 would cover, literally, 1.8 seconds of federal government spending.


There are lots more immigrants that could be paying taxes if we just adjusted our policies a bit.


Never ask why Eduardo Saverin burnt his us passport and went to Singapore.


Probably because the US is becoming an increasingly hostile place to wealth, not to mention the fact that we're a police state.

Singapore is an incredibly good place to do business, I'm not shocked, especially since he wasn't a native born American.

Oh yeah, the real kicker is that you have to renounce citizenship, or you'll pay federal taxes even while living abroad. (True for dual citizens, too)

That was probably his real reason.


Paypal is nowadays, what IE6 is for browsers!


there is no Stripe for aliens yet unfortunately but there is PayPal


Emmanuel,

If you get a job offer, such as a 5-10 hour a week job at your college, you are ALLOWED to apply for a SSN.

This is what I would recommend doing if you are just looking for an SSN. But do understand that working without permission is a huge no-no.

As far as applying for pre-completion OPT, you could do that... it will take 2-3 months to get approved and you will start using up the 12 months of OPT you get per degree level. If you choose to go this route, make sure you actually register your business with your local clerk's office and report it.

One other commmenter mentioned a STEM extension. The one problem with STEM is that you have to work for an e-verified company.

I hope I was helpful, I am an international student advisor, but I am not your advisor at your school who I would recommend speaking with.


Hi Emmanuel, I'm sorry for your troubles. Sounds like Paypal is being unreasonable - hardly the first time. I would suggest a two-pronged approach:

1. Find a lawyer who can advise you, definitely based in the US, and almost certainly based on CA, the home state of PayPal. As you (potentially) have $200k in cash, you'll have no problem finding excellent representation. Hopefully you can get away with spending only a few thousand.

2. Select a different payment processor. You can do this immediately. Stripe has a good reputation, but there are others as well.

3. (Optionally) Post your progress. Especially if the lawyer can give you good advice that is applicable to others in your same situation, you are potentially saving other innovators many thousands of dollars not to mention headaches.

Good luck.


How is PayPal being unreasonable? A person without a SSN has received $200,000 in their PayPal account. I would be surprised if PayPal didn't freeze that account.


Thanks, i have called paypal 1000 times today.


Is anyone else amazed this guy made 200k with an open source js library like this?

What am I doing with my life?


I was always wondering, if PayPal locks a 200k$ account, where does that money go?


Typically, to the account holder either (a) after they submit the requested documentation or (b) after 180 days if their account was terminated in order to cover future chargebacks. You just don't read that part of the story because people write about it on day one, not after they understand and have resolved the problem.


It doesn't "go" anywhere, it's just a balance. It remains locked until some resolution of an investigation happens, it's no different than when a bank account is frozen.


Don't you have one in Venezuela? They were more than happy to accept my Greek id.


Why is PayPal's policy to wait until the account accrues significant funds and then lock it? If the OP doesn't have an SSN then why wouldn't PayPal block the account from being registered in the first place?


Occasional sales of personal property below a threshold value are not taxable, nor do they need to be reported to the IRS, etc., nor do most payments, so creating an account does not necessarily require an SSN/TIN.


http://www.aaronkellylaw.com/

Give him a call. He has handled cases for me with PayPal. He comes highly recommended, just search his name.

He can fix this mess without high expenses.


Get a taxpayer ID and give them that?

http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...


That's not a good advice. If you care about your present and future ability to legally stay and work in the US, you should first consult with an emigration lawyer since it appears that you're breaking emigration laws and only then try to get your money back.


What you could always do is apply for an international business licence that allows you to have a satellite office in the united states. The only problem that you would have with that is you would first need to establish a business in your home country. At that point you would be issued a EID or Tax ID number for your business which would enable the US federal government to take taxes out on any profit that you make with in the USA. Hope this helped and I hope you well in all your future en-devours.


Sorry about what happened with you. The only why you could get the money is to had the PayPal account linked with one account in Venezuela instead of US. According with your F1 status (and mine) you cannot earn any money in US while studying, unless you get authorization from school to work out of campus (CPT), or after conclude your studies (OPT). Even under CPT/OPT you cannot earn money other from other place than the place you work on. Sorry, I wish you the best luck.


First, I didn't know about turn.js, just checked it out, it rocks! Second : You are probably breaking emigration laws. I'd recommend you consult with an emigration lawyer ASAP.


Have you tried?: How to Unlock a PayPal Account http://www.ehow.com/how_7657756_unlock-paypal-account.html via @eHow

Also, other comments have stated that if the lock msg. came via email it could be a phishing scam. Try to avoid supplying personal info if looks like a suspicious email.

More: http://en.wikipedia.org/wiki/PayPal#Criticism


Hi there. Congratulations on your success, I'm very sorry to hear you're having problems.

The issue seems to be that PayPal are worried you're doing something illegal and are not going to pay tax. My advice would be to get a lawyer so you can do everything required to pay tax correctly. In the mean time, try to get some written confirmation from PayPal that your money will be safe while you are resolving this issue - that last thing you want is the money 'disappearing'.


I wont be much help but I can confirm that PayPal does this often and it IS reported upon frequently. I, personally, have had thousands of dollars held (just above 20k USD) for 8 months (6 month hold and 2 months of furious phone calls to get a check cut).

I will never use them again as I believe they stifle innovation and are a harm to small businesses that are "making it".

PayPal is very much one basket for all your eggs...don't get duped! Get other baskets!


Where does PayPal ask for an SSN? That doesn't sound right.


As of 2011, all payment processors must report the gross receipts of all merchants earning over $20,000 in a year (like Emmanuel) on a Form 1099-K. This form requires a taxpayer identification number. PayPal has to ask for it to file the form. They've also always asked for it as part of their underwriting of accounts that trip their fraud detection systems in some way -- which a sudden jump in payments like this would also do.


I'm Canadian, and receive some payments from Americans. Paypal asked me for a Tax ID number of SSN in order to report to the IRS.


Maybe they have issue with the fact that you are from Venezuela? I've sen multiple venezuelan PayPal accounts being blocked because they know sometimes they are used for getting around CADIVI (currency exchange restrictions). Maybe your nationality and the fact that you made that much money triggered some flags.

From a fellow venezuelan, hope you get your money back. And congratulations on your success even in this unpleasant situation.


Are you in TO?


INAL either, but I have gone through the ITIN process. If you follow this route you will need to send notarized documents(birth certs, passports). The difficulty is that the US will not recognize notarized by any one out side the US. This was not explicitly stated(a few years ago), after having ITIN applications rejected 3 times, we took the paperwork to the US consulate, they processed it and it was all good.


If you are on a student visa you are not allowed to get that money even if you had a SSN. You will be violating the rules of your visa. After you graduate, find a job and go on H1-B you still can't earn any money outside that job. No paypal, not adsense, no stripe. Eventually if you decide to apply for a green card these things will come up and you will have to leave the country.


With any money transfer/payment service, DON'T keep money on it. Withdraw to cash every week, and spend or keep in a bank vault. I normally don't even put real mail address anywhere and ask different people to do ATM withdrawals. I am not doing anything criminal at all, but WHO KNOWS? It's always better to be protected especially when it doesn't cost me anything.


Find an american friend with a SSN? I am not sure this would really work, but it's definitely worth a shot. Of course your friend will have to count it as income; but honestly this will probably be a lot cheaper than hiring a lawyer if it works. I don't really see a downside to trying this method; since you can't really lose the money that's already gone.


The downside is that it then starts to look even more like fraud or money laundering and possible legal action, in addition to the freezing of the account, happens.

This is the worst advice in this entire thread. The money isn't gone, it's just frozen. It can get unfrozen quite easily provided that Emmanuel is smart and makes sure to get a good lawyer who can walk him through all of the necessary steps to get his business set up correctly.


Get any job (#), including part-time and temp jobs, and you instantly get a US social security number.

That said, Paypal are acting like dicks, as usual, since you do NOT need an SSN to open ordinary bank accounts in the US.

(#) You may need written permission from your school to work.

Source: http://www.ssa.gov/pubs/10181.html


Perhaps FastSpring would be a good fit for you. Any country the US isn't banned from doing business with is applicable. Users pay in various global currencies and the order pages are translated. I'm the CEO. Funny that you mention Venezuela, my wife just got a grant to do art history research there so I may be visiting soon.


I would get a lawyer in the US. They might think that you're laundering money, until you can prove your id.


See what this poor guy is going through? There are a lot of bright people here. Sounds like a start-up opportunity for someone. He can't be the only person who winds up in this situation. Solving this could open the door for others who have the skills to make money like he did.


This really sucks. PayPal is terrible for doing stuff like this, and I really feel for you. While I don't have any specific suggestions for dealing with PayPal, maybe you could setup a Crowdtilt or similar fundraising opportunity and link it on your site?

I love turnjs btw. Very slick tool.


You need an ITIN, which is the equivalent of an SSN but for non-US taxpayers receiving payments from US sources.

http://www.irs.gov/Individuals/Individual-Taxpayer-Identific...


You'll get your money in a few weeks, PayPal are just enjoying the interest for now.


I'm flabbergasted by how 200k can be reached within six months with that product.


I'm unclear as to whether you mean "Flabbergasted" that it's worth more, or flabbergasted that it's a good amount?

If you mean "worth more" - well, maybe, but at the same time, you can only make as much as the market will yield.

If you mean "worth less" - $200K over six months is OK, but not great if you realize that there will be likely six month period (one year periods?) where revenue will be very low.

It's very boom/bust, and the $200K made here needs to go a long, long way. All in all, you would probably (more than 50% of the time) make more money providing desktop support than trying to sell software (or games) as an independent entrepreneur.

Of course, some times, you hit it big, and it makes all the sweat and toil worthwhile.


Actually, I got a very good feedback. Google saw the new turn.js and wanted to promote the next release by the way.


PayPal is not as crooked as people say they are. Just start a company with someone in he US. Payments go,to their company and they pay you. Assuming its a legit business "don't know how I made" 200k doesnt sound legit.


You realize how much freedom people like you take from regular people? PayPal makes the Sopranos look kind and caring, as do he TBTF banks.

"Doesn't sound legit".... I hope you're caught into the other side of "inverted totalitarianism" and just maybe you might be able to see what the mirror has to show you.


Do you or your parents have bank accounts in the US or in your home country? I would suggest working with PayPal to switch your account to your original country and seeing if you can then get the funds withdrawn.


Unfortunately we are not allowed to have dollars in Venezuela. Look CADIVI up in Wikipedia


PayPal is multi-currency so perhaps it's possible to convert to a currency that will work.

I guess the point is, moving money around is not that easy, country borders make it significantly more difficult, PayPal freezes typically make sense (such as in this case) but PayPal is made up of people, many of whom might be willing and able to help you out.


You can get a Taxpayer Id Number in about 10 minutes from the IRS with basically no questions asked (they want to make it easy to pay taxes, even for sketchy situations). The TIN might be a substitute for SSN.


Sorry to hear your situation.

For others: Assuming this problem is solved, in future, can an international student collect payments in his home currency? Will US govt allow full time students to do side businesses?


You should contact David Marcus, Paypal's relatively new CEO. At least one other HN thread shows his willingness to help: http://ndy.gd/JJgB


I don't know why people always use Paypal when it's had a history of screwing people over.

Use Google checkout for merchants, I've used it and it's really really easy to setup as well as safe.


Google Checkout closed our account because of suspicious attempted purchases of our JavaScript ebook, and kept our money.

So… nope.


How did they keep your money? Was it just a small amount that you couldn't be bothered with so you let them have it? (going by how well your products seem to be doing that's unlikely)

Otherwise I can't see any legal way that they (or PayPal for that matter) would be able to keep anything beyond their transaction fees.


Simple: they close the account without appeal and there is no way to contact a human.

http://slash7.com/articles/2009/3/26/google-is-evil-worse-th...


If you go to school here in US, you are allowed to work on-campus and that will make you eligible for a SSN. Check with your international center.


Emmanuel,

I can't help you get back the money that PayPal has frozen, but I can help you keep selling it and ensure you keep what's yours.

Email me - tyler [at] simplegoods.co


You can get a social security number with you F1 or J1 visa.... I just did when I got my MSc. For example, if you work as a T.A. or R.A. you get a SSN.

Good Luck!


If you get a SSN on a F1 visa, you are allowed to work as a T.A. for a limited number of hours - but as soon as full-time commercial job or 200k of business income is reported to that SSN, your visa turns into a ticket back home.


Call Paypal, Don't be stupid to email them, these are useless, when big money is involved. Call them, Talk to them, they will help you out.


Sad to hear this, I've used and appreciated turn.js. Hopefully the tax situation works itself out as other commenters have described.


Next time always remember to withdraw your earnings no matter how small the amount, once its in an account other than your bank.


I once saw a topic where the new CEO requested that people with problems contact him in person.

I thought it was david@paypal.com, i'm not sure.


Good luck buddy. I can only hope you get all the necessary help. That's because I am not in any position to help you.


It seems turnjs.com is still using PayPal... At this point you should switch to another provider...


Get a TIN its an alternative to SSN for non-us citizen who are doing business with United States


Wish these companies could make Terms and Conditions Human Readable


Hi, I'm not a expert on US laws, but given how it mostly works, yeah you are in the wrong, if they say so. But all is not lost I suppose.

You must find a lawyer in any case, a good one! though there is no guarantee it will work, but if something would work, it would be this or a clear provision/flaw you may find on your own (I take it that you won't be able to)

Three legal courses might work on broader terms, leave the actual litigation to the lawyer.

1. The lawyer may prove that someone, who is a US citizen, a family member preferably, or a family friend, is the real owner of the product, and you mis-stated your facts. (meaning, you didn't say under oath, that the said service/product was your and yours ALONE)

The lawyer would take his cut in all cases, and if anything, you should give your family member a cut as well, in this case. Its better than nothing out of 200k$!

2. You may establish a US company, preferably in a state where tax is low and norms are lax, based on strong advice of your lawyer, with preferably the same name as your product. The lawyer in this case would prove (or try to) that the company would receive the money (being a separate legal identity), and a friend of yours who is a US citizen, would be the trustee of the company.

Similarly to above, lawyer will get his cut, your friend would do as well (unless he is the nicest guy on the planet, if he does not take any money, do PM about it on reddit@rikacomet).

3. The lawyer, may establish, that there was an error in your understanding of the US laws (which is clearly so), and since paypal allows for you to be a member of any country, you shall recieve it upon changing the credentials of yours, to your native one's. The lawyer, shall argue, that the payment made by your customers, would hold true, despite you changing ONLY your address details.

Alternatively, if all your payments were made by credit card (which might be the case), you may contact, all your customers, to initiate a cash back (where they will legally call back money from their bank, after stating that a huge flaw was made, and the original deal holds untrue) the bank would know its way with paypal, so no worries there, but what you need to worry about is bank making a case against you. So you would need a lawyer again over here.

Disclaimer: Always, talk to a professional lawyer about legal matters, mine is only mildly suggestive in nature based on laws existing in my country.

NOTE: Please be very careful, while finding a good lawyer, while you do, make sure to make it clear to him, that the payment, would be only a cut out of the 200k in question here, and not out of your pocket.

Take this on a legal document in WRITING, with his signature and official stamp heads, in presence of 2-4 witnesses etc. You really don't want to lose 200k, and then also pay a American lawyer out of your pocket!


It boggles my mind how PayPal can again and again get away with this.

The ability of PayPal to be a bank and yet avoid being one legally is interesting. If you hold somebody else's money you are a bank, whether you call yourself that way or not.


Have you read any of the comments here before writing your own? What is PayPal getting away with? How would another bank have acted differently? What regulation do you think applies to banks but not to PayPal in this situation? They are all beholden to the PATRIOT Act, and to the IRS; PayPal is also beholden to 50 different states' Money Transmitter licensing regulations. None of them want to be a conduit for international money laundering.


I could ask you same about reading comments...

If I am not mistaken a significant percentage of them seem to agree with me and suggest sweeping funds to an actual bank periodically.

I apologize if I somehow offended you, but I stand by my statement.


1) he would not be able to get an actual US bank account without getting the legal issues in order; 2) sweeping funds would not prevent either his tax problems or visa problems, which likely are much more serious than simply the locked money.

Sweeping funds would be a nice-to-have - it would have helped, sure, but it's not really a solution.


Been thinking the same thing for a while.

We even adjusted the accounting software to tread PayPal as if it was a bank ... The amount of accounting time on PayPal went down. Because it's well ... a bank, without the legal obligations :( and that means we are screwed.


For digital goods you use bitcoin, always and everywhere. please fix this as soon as your next release, God what are you thinking? The USSA has become a beacon of INVERTED TOTALITARIANISM. google that.


Bitcoin?


Apply for a TIN. That's equivalent to a SSN for tax purposes.


Why you didn't pull your money from PayPal once every week?


Good question.


After you get your money back, dish Paypal and use Stripe.


This happened to me back in 2007, contact me for tactics.


Ha ha. Not PayPal Fault! Your fault for using them.


Were you lying about being an american student?


No, I had an old U.S. account and I wasn't able to change the country. I created a venezuelan account later on, but I saw that the U.S. account provided some features, so I stupidly thought that was ok to then transfer the money to the Venezuelan account. I started to sell licenses while I was outside the U.S.


Exact same issue here! I moved to England and there's no way I can change my Country. So, my address is correct but not the Country! Paypal just sucks really!

I just wonder why don't you Emmanuel provide more information.


Sorry, they stole your money. This is a big advantage of theirs, they aren't regulated like a bank so they have no trouble taking money from marginalized people.


Why does someone always write this? PayPal is regulated to exactly the same degree a merchant account from a bank is. Their contracts are essentially identical, mirroring PayPal's own agreements with the banks that underwrite their accounts (Wells Fargo and JP Morgan Chase). Banks suspend merchant accounts and freeze their money for the same reasons and for the same periods of time, and no regulation stops them from doing so. In many countries, PayPal is considered a bank. In the US, it is licensed and regulated as a money transmitter in all 50 states.


I don't recall banks freezing your assets for 6+ months to make sure your business is legit.


I do, since it happened to me 9 years ago when I was as naive about the industry as you. First National Bank of Omaha, the largest privately held bank with $17bn in assets, if you're curious. The several thousand dollars of customer payments they had not yet disbursed was held for exactly 180 days before they released it to me.

Do you not recall because you haven't read your own agreement, or because you haven't actually opened a merchant account with a bank before? You don't have to take my word. Type ["merchant account agreement" 180] into Google to see some 40,000 examples of bank contracts with that same hold period written into them.


I've worked in a bank, and we did freeze accounts on money laundering suspicions - it's not even a choice, the law requires to do so in certain conditions.

And the OP case description is quite unclear, but the details sound like that it might be not "assets frozen while check if business is legit", but actually a threat of "charges filed against owner for circumventing anti-money laundering laws and assets confiscated".


Use WePay.com


Lawyer up. This is ridiculous.


get a lawyer, get an accountant, get incorporated.


i did suggest you ask this question at Quora too


i've no idea. But wish u good luck


Paypal are bastards, as simple as that.


So, I'm going to hold an antithetical position here, because I've been on the other side of this, but rather than panicking and screaming "villain," I took the time to understand what was going on, and I got a reversal. I think you can too, but you'll need to discard the common contempt for PayPal and consider that they might actually have a reason for what they're doing.

.

"PayPal has closed my account because I don’t have a social security number. It seems like I don’t qualify for one because I’m just “an international student” from Venezuela."

I just don't believe this one bit. People from Venezuela do use PayPal quite a bit.

More likely what this is actually about is that you haven't done the minimum to do business in America, which PayPal told you up front that they expected you to do.

They're not actually able to do business with you, because you haven't taken the correct steps yet. If you say "oh my god they're punishing me for being from the wrong country," you're screwed.

But if you figure out the problem, you can fix it.

Here's the thing. In America, like in Venezuela and most of the rest of the world, you're expected to pay taxes on money transfer. It's an income stream.

The social security number is how Americans track these things in their private lives. Sure, you won't get one because you're not American, but there are foreign equivalents, and they're cheap. We do want to do business with you; you just have to be clean.

PayPal can't give you your money until you do what the US Government requires. It would be illegal. It would make them into a criminal money laundering organization.

I'm not really sure; I'm no tax attorney. But, I think what you want is an ITIN - an Individual Taxpayer Identification Number. They are free, they're available online, and they only take a couple weeks to get.

http://en.wikipedia.org/wiki/Individual_Taxpayer_Identificat...

http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

http://www.irs.gov/Individuals/International-Taxpayers/Obtai...

It's very common in the tech community for people to hear "PayPal shut off an account? They're the devil!" But in reality, this is how America keeps its money from flowing to criminal organizations, and PayPal's hands are tied here.

If you took the time to talk to them, and said "listen, I didn't know there was a problem, can you help me understand what steps I need to take to get this turned around," it's very likely they'll actually help you, like they helped me.

The toxic Redditor behavior is getting out of control. Not every time a large company does something that seems punitive is it actually in the wrong, and in this situation, they're really just following the law. That's expected. That's correct.

Also, to put things in perspective, you seem to be frustrated that you have to wait six months to receive five years of an average American's salary. I mean, I don't think this is actually as bad as you're making it out to be, unless you've tied your entire life to taking money from the internet, and can't survive without it.

I think maybe you should consider the possibility of asking some of your users for a little spare cash through some crowdfunding site (full disclosure: I work for a crowdfunding site, which is why I'm not naming options right now, because it would be unethical.)

And then maybe just try to work with PayPal to fix the problem, instead of begging the internet to try to hammer-lock PayPal into breaking the law for you, because no matter how hard you try, that is never, ever going to work.

Try setting up a Google Voice account, and calling them on the phone. If they can hear your fear in your voice, the human will to do good and help will come out, and they will put in effort to assist. I promise. That's just how people work.

Also consider getting in contact with the American tax authority, the IRS. It's pretty common for people to hate and fear them, but they're actually wonderful people; their big job is to prevent rich people from cheating the system, and to support poor people, and your story is very sympathetic. Someone from the IRS will, if you just ask, put in hours and hours to try to help you, for free. That's what they do for a living.

You can choose to assume everyone's evil and out to get you, or you can choose to assume that you accidentally didn't get the rules right, and that fixing that could change things.

Which one of those assumptions you make will very significantly change the outcome you get.

There is a reason that people who expect good things from other people generally do well in life. They're able to ask for, and receive, more help. Bad things are fixed more reliably. Et cetera.

Just make a human appeal. "I didn't know I screwed up. I still don't know how. I earned this money legitimately, and I need it. Can you help me learn what I did wrong, so that I can fix it?"

Give them a chance to be good - maybe even a couple - and they will be good.

PayPal is not the evil faceless demon they're made out to be. International payments are complicated, and people from other countries often get domestic law wrong.

But I really don't think they want to cheat you; after all, they make their money by helping you do more business. Shutting you off doesn't do them any good.

Please consider approaching this like you might have made a mistake, because if it's you, and not them, then fixing it and changing this is entirely inside your power. Taking responsibility means acquiring power. Pointing fingers weakens you.

I hope the best for your situation. Please be safe.


The comments here are good.

One point not addressed in the comments is that whether PayPal ever gives you the money back or not, OP has earned $200,000 in income while in the United States and he owes the IRS and possibly the state government as well full US income tax on this amount since he was in the US at the time he did this work. It doesn't matter what his visa situation is, that has nothing at all to do with if he owes taxes. He is required to file an income tax return this year, and pay the taxes, end of story. If he doesn't pay the taxes, he might go to jail and probably will get a felony record and be permanently banned from returning to the US after release.

So this is a pretty serious problem and requires a legal team, which undoubtedly will cost the full amount on deposit to untangle.

He can't just walk away from the situation and let PayPal keep the money, unless he can get the amount he owes in taxes from a relative and pay it, which then puts him into debt.


Instead of all the negative comments about Paypal (I still use them, but I make sure I withdraw money at least every month, in busy times more often), I would suggest not going to the US without stuff like this covered and enough money & insurance to defend yourself. It seems the US is overly aggressive in most legal matters and doesn't really consider the circumstances too much (I don't know if this is overall true, but it seems so from everything I have read). This could ruin a person's life while he only wanted to make some money; it should be possible to explain that and get some understanding instead of threats, bills of lawyers, putting his family in debt for paying his legal fees. He simply didn't know the consequences of what he was doing in trusting Paypal. That's not his fault and he shouldn't be punished for that by a crippled, lawyers take all, 'justice' system.

I'm wondering; when I travel abroad for longer times I have law assistance insurance; it's not expensive and, in his case, it would pay the lawyers for me (set aside some self risk of around E500 one-off per case); isn't this normal for people to close before going that long (and thus more risky) to the US?


question , why the hell would you let 200k sitting on a paypal accound for 6 months ? i dont understand. At least invest that money in obligations, life insurance or something ... even with 3/4% returns it is worth it, you could almost live without working in Venezuela ...


[dead]


That is extremely useful, actionable advice.


And timely!


Sue.


wow, that's crazy? Holy crap


Use PayPal - get screwed. Rinse, wash, repeat.


If you open US payment processing accounts without US citizenship or a Visa that allows it, take 6 figures in payments while out of the country, then try to move it into an anonymous payment account across international borders, someone's going to investigate it. The tax code ensures that investigation begins within a year, since that kind of money moving has to be reported on a 1099-K. That's not PayPal screwing anyone, Donn.


Use bitcoin for anything that's not tied up in an inverted totalitarian regime.

And Dan, look up, check out for the drones.


Do you have a cousin in Nigeria?




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