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Having worked in fraud protection for several very large banks I totally understand the need for automation and case reviews. However PayPal stands out for me

Having worked in fraud protection for several very large banks I totally understand the need for automation and case reviews. However PayPal stands out for me as THE worst company in finance. One colleague has over $25k that has been held pending company verification for AML reasons. This has been ongoing for over 1.5 years every time he completes the requirement PayPal issues additional requirements. And the according to email replies he received, the department responsible for such case reviews has been on leave for 3 months due to COVID. What does PayPal do with money that is frozen? Are they allowed to gain from it? I now always advocate strongly against using Paypal.

notyourwork 6y ago
A much smaller scale but same problem. I for a holiday years ago received an iPod from two different relatives. My parents bought me one earlier that year so although appreciated I didn't want to offend family and try to ask for a receipt or return them. Therefore I opted for selling them via eBay. As an eBay small volume seller with 100% positive rating, I posted 2 iPods, sold and shipped to payer. My account funds were frozen and paypal requested proof of purchase. At this point as a poor high school student I was flabbergasted they could withhold my money for no reason. I reached out to both relatives, explained what happened and told them about the receipt paypal requested. Both send me a copy of the receipt which I supplied. Paypal rejected the receipts (I forget the reason) and told me they were not going to release the funds. I determined they could only hold it for 6 months (I don't remember the legal reasons here). Therefore, I parked my account paypal account, 6 months later took my money and never looked back.
- csomar 6y ago
  It's easy to bash PayPal but they probably implemented that after too many people used the platform to sell stolen goods. The receipt was probably in your relatives name's; which means you did not buy it. This is actually a good use case for Gift cards.
  - TheSpiceIsLife 6y ago
    Absurd. PayPal should just ask the seller to have the original purchaser make a statutory declaration stating the item was a gift to a relative / friend, maybe provide some sort of supporting documentation to prove the relationship.
    - sansnomme 6y ago
      Notarizations and medallions are not cheap.
      - TheSpiceIsLife 6y ago
        Here in Australia the list of people who can notarise a stat dec is as long as your arm. https://www.ag.gov.au/legal-system/statutory-declarations/who-can-witness-your-statutory-declaration https://www.ag.gov.au/legal-system/statutory-declarations/wh... Your point still stands, you may not know any of those people who are willing to witness a stat dec below the value of the funds in question.
  - notyourwork 6y ago
    I'm not clear on why selling 2 iPods is cause for Paypal to assume malicious intent. Selling dozens sure but come on.
  - Nextgrid 6y ago
    Yes but that's PayPal's problem and it's up to them to find a solution that works for both sides, or leave the business and let a more competent company solve the problem. It's not an impossible problem to solve either, banks also have requirements to detect and block fraud and they do occasionally get it wrong but at the very least you are able to reach out to a human (and not a script-reading monkey, as in PayPal's case) and get any false-positives sorted out. What is not right is presenting their service as easy to use, letting people sign up and sell items and then essentially steal the money unless they are lucky enough to pass their broken verification process.
- RcouF1uZ4gsC 6y ago
  > I didn't want to offend family and try to ask for a receipt or return them >I reached out to both relatives, explained what happened and told them about the receipt paypal requested. Both send me a copy of the receipt which I supplied. Sounds like the worst possible outcome. You no longer had the iPods. You didn’t get the money. The relatives found out you didn’t like their gift.
  - ncmncm 6y ago
    Second worst. Paypal confiscating the money might be worse, or SWATting you would be worse. Waiting 6 months is a nice hack, but how about the guy who has waited 18 months for $25k? Does he just need to stop pestering them for 6 months and voilà? Or is the rule different above $5k? Or outside the US? Or outside Europe?
- tylermenezes 6y ago
  > Paypal rejected the receipts (I forget the reason) This reminds me of when PayPal told me I needed to send them a scan of my drivers license, then rejected it as fake. ??? The upside is that my account isn't allowed to hold a balance, and they transfer any funds immediately to my bank, which... I dunno that seems like my account has been improved?
  - thephyber 6y ago
    I've tied credit cards to PayPal, but not checking/savings accounts. The company historically has had very loud users who post about all of the bad experiences of having their bank account frozen by PayPal, who then proceeds to slow step their way to investigating. Having a personal bank account frozen for 6 months isn't something I'm prepared to tolerate for a moderate amount of retail convenience, even if the probability is extremely low. Somewhat related funny: a friend of mine lived/s on "Isis Court". His Venmo transfers were always delayed/held for review for what we suspect are obvious reasons that the implementation of the State Department sanctioned persons list seems to be a substring match, ignoring that there are extremely relevant semantic differences between Isis that can show up in a street address in the USA and an employer/organization name in Western Asia.
    - thelittleone 6y ago
      PayPal has frozen people's personal accounts? How does that work? Paypal fraud team contacts bank fraud team?
      - thephyber 6y ago
        I actually don't have independent verification that this is what actually happened. It's possible that the description of what happened was inaccurate. That said, there are enough posts on PayPalSucks.com to scare a person away from using PayPal without lots of redundant/protective measures.
  - raverbashing 6y ago
    Saying your license is fake sounds to be grounds for a lawsuit
nitwit005 6y ago
There was a prior lawsuit over the issue that they settled: https://blogs.findlaw.com/decided/2016/02/paypal-to-settle-improper-account-freezing-class-action.html https://blogs.findlaw.com/decided/2016/02/paypal-to-settle-i... One of the main complaints was they never paid the interest on the money, so I'd assume they were making money off of it.
- TheSpiceIsLife 6y ago
  Even if the withholding organisation isn't making money off it, there's an argument to made that you could have.
  - close04 6y ago
    Indeed, as the old saying goes, a dollar today is worth more than a dollar tomorrow [0]. [0] https://www.apwip.com/a-dollar-today-is-worth-more-than-a-dollar-tomorrow-the-financial-aspect-of-the-time-value-of-money/ https://www.apwip.com/a-dollar-today-is-worth-more-than-a-do...
rb808 6y ago
I think this is just normal for big financial institutions. The small ones just break the rules or haven't been audited yet. The regulation is very suffocating.
- thelittleone 6y ago
  They've had their case review team on leave for 3 months. Paypal knows that some percentage of all cases under review are legit. Yet they chose to close the department. My friend is foetunate to he some savings but what if he didn't? And what about others? What about opportunity cost of missed investments and interest? They shut the fucking door knowing this.
the_svd_doctor 6y ago
Why would anyone have 25k in a Paypal account ? Genuinely curious. I never understood friends who keep 500-1000$ in their Venmo account. I empty it to my checking as soon as I have money in it.
- snark42 6y ago
  I've experienced this with $5k buy-in poker games settled via Venmo... I'm sure there's other good reasons.
- thelittleone 6y ago
  Payouts for a high end airbnb property. They fairly wanted additional proof of incorporatiin which was duly provided.... Many months ago. It seems almost like insurance companies. Deny first , make claimant jump through hoop after hoop hope they give up. What happens to the money then? This is very interesting because if they can profit from this we all the more disturbing.
- xenospn 6y ago
  I set up an auto-sweep in PayPal to deposit my entire balance to the business bank account every day. I don't trust them.
  - thelittleone 6y ago
    Me neither. I find myself struggling to trust any large company. Older and wiser or just jaded I don't know which. These organisations entrench themselves in our lives that even when we dislike then intensely we sometimes don't have easy alternatives. Size seems to corrupt. Any examples if shining, upstanding, beneficent megacorps?
    - xenospn 6y ago
      Not sure about megacorp status, but Stripe never gave me any problems and always works.
      - 6y ago
baybal2 6y ago
Are there still people now who doubt that it's an official policy at paypal to make money on freezing people's accounts on every pretext? My first experience litigating with paypal actually dates to years right after my secondary, when I was an exchange student in Singapore. I had a paypal registered on my Russian debit card, and used it for trading on ebay. And yes, one nice day I learned that they want me to prove them that I am not Bennie Laden, with each successive document submission being less, and less reasonable, like demanding a notarised bank statement with wording that no sane Russian bank would issue in its right mind. So, I read the contract, and I saw "agree to dispute resolution under law of Republic of Singapore," which was a rather weird thing to see on a commercial contract from Paypal Russia LLC. And so, I got the name of the case officer at Paypal, and had a writ of summon delivered to him in person, myself in a few days. There was no way to describe terror on his face. I remember an exchange: - "Are you that person lawyer?" - "No, I am that guy" They settled on the first hearing. Only few years later, it came to me that they could have buried me with legal fees, even with court fees alone if they've chosen to continue.
- ncmncm 6y ago
  Personal writ of summons FTW! It bugs me that people don't name bad cops personally in lawsuits. Sure, sue the city for employing them even after all they have done over the years, but sue them personally for injury / suffering.
  - toomuchtodo 6y ago
    https://en.wikipedia.org/wiki/Qualified_immunity https://en.wikipedia.org/wiki/Qualified_immunity (Wikipedia: qualified immunity)
- thelittleone 6y ago
  This is awesome. Do you have a template for the document? Any other tips like how did you find the name of the appropriate legal contact at PayPal?
  - baybal2 6y ago
egypturnash 6y ago
Who do you recommend using instead? More precisely: who do you recommend using that has an interface designed for a non-technical person to be able to send and receive money without much more hassle than setting up an account, verifying their identity, and connecting a bank account or three?
- efreak 6y ago
  My understanding is that most banks in the US support Zelle. This gets you your money faster. The biggest issue I personally know of is that every bank has it's own name for it.
_bxg1 6y ago
Worth noting that Venmo is owned by PayPal, and from what I've heard its tech is trash (on top of probably the same bureaucratic issues). People I've known at PayPal have said they would never ever put their financial info into Venmo's systems.

notyourwork 6y ago

A much smaller scale but same problem. I for a holiday years ago received an iPod from two different relatives. My parents bought me one earlier that year so although appreciated I didn't want to offend family and try to ask for a receipt or return them. Therefore I opted for selling them via eBay. As an eBay small volume seller with 100% positive rating, I posted 2 iPods, sold and shipped to payer. My account funds were frozen and paypal requested proof of purchase. At this point as a poor high school student I was flabbergasted they could withhold my money for no reason. I reached out to both relatives, explained what happened and told them about the receipt paypal requested. Both send me a copy of the receipt which I supplied. Paypal rejected the receipts (I forget the reason) and told me they were not going to release the funds. I determined they could only hold it for 6 months (I don't remember the legal reasons here). Therefore, I parked my account paypal account, 6 months later took my money and never looked back.

csomar 6y ago
It's easy to bash PayPal but they probably implemented that after too many people used the platform to sell stolen goods. The receipt was probably in your relatives name's; which means you did not buy it. This is actually a good use case for Gift cards.
- TheSpiceIsLife 6y ago
  Absurd. PayPal should just ask the seller to have the original purchaser make a statutory declaration stating the item was a gift to a relative / friend, maybe provide some sort of supporting documentation to prove the relationship.
  - sansnomme 6y ago
    Notarizations and medallions are not cheap.
    - TheSpiceIsLife 6y ago
      Here in Australia the list of people who can notarise a stat dec is as long as your arm. https://www.ag.gov.au/legal-system/statutory-declarations/who-can-witness-your-statutory-declaration https://www.ag.gov.au/legal-system/statutory-declarations/wh... Your point still stands, you may not know any of those people who are willing to witness a stat dec below the value of the funds in question.
- notyourwork 6y ago
  I'm not clear on why selling 2 iPods is cause for Paypal to assume malicious intent. Selling dozens sure but come on.
- Nextgrid 6y ago
  Yes but that's PayPal's problem and it's up to them to find a solution that works for both sides, or leave the business and let a more competent company solve the problem. It's not an impossible problem to solve either, banks also have requirements to detect and block fraud and they do occasionally get it wrong but at the very least you are able to reach out to a human (and not a script-reading monkey, as in PayPal's case) and get any false-positives sorted out. What is not right is presenting their service as easy to use, letting people sign up and sell items and then essentially steal the money unless they are lucky enough to pass their broken verification process.
RcouF1uZ4gsC 6y ago
> I didn't want to offend family and try to ask for a receipt or return them >I reached out to both relatives, explained what happened and told them about the receipt paypal requested. Both send me a copy of the receipt which I supplied. Sounds like the worst possible outcome. You no longer had the iPods. You didn’t get the money. The relatives found out you didn’t like their gift.
- ncmncm 6y ago
  Second worst. Paypal confiscating the money might be worse, or SWATting you would be worse. Waiting 6 months is a nice hack, but how about the guy who has waited 18 months for $25k? Does he just need to stop pestering them for 6 months and voilà? Or is the rule different above $5k? Or outside the US? Or outside Europe?
tylermenezes 6y ago
> Paypal rejected the receipts (I forget the reason) This reminds me of when PayPal told me I needed to send them a scan of my drivers license, then rejected it as fake. ??? The upside is that my account isn't allowed to hold a balance, and they transfer any funds immediately to my bank, which... I dunno that seems like my account has been improved?
- thephyber 6y ago
  I've tied credit cards to PayPal, but not checking/savings accounts. The company historically has had very loud users who post about all of the bad experiences of having their bank account frozen by PayPal, who then proceeds to slow step their way to investigating. Having a personal bank account frozen for 6 months isn't something I'm prepared to tolerate for a moderate amount of retail convenience, even if the probability is extremely low. Somewhat related funny: a friend of mine lived/s on "Isis Court". His Venmo transfers were always delayed/held for review for what we suspect are obvious reasons that the implementation of the State Department sanctioned persons list seems to be a substring match, ignoring that there are extremely relevant semantic differences between Isis that can show up in a street address in the USA and an employer/organization name in Western Asia.
  - thelittleone 6y ago
    PayPal has frozen people's personal accounts? How does that work? Paypal fraud team contacts bank fraud team?
    - thephyber 6y ago
      I actually don't have independent verification that this is what actually happened. It's possible that the description of what happened was inaccurate. That said, there are enough posts on PayPalSucks.com to scare a person away from using PayPal without lots of redundant/protective measures.
- raverbashing 6y ago
  Saying your license is fake sounds to be grounds for a lawsuit

nitwit005 6y ago

There was a prior lawsuit over the issue that they settled: https://blogs.findlaw.com/decided/2016/02/paypal-to-settle-improper-account-freezing-class-action.html https://blogs.findlaw.com/decided/2016/02/paypal-to-settle-i... One of the main complaints was they never paid the interest on the money, so I'd assume they were making money off of it.

TheSpiceIsLife 6y ago
Even if the withholding organisation isn't making money off it, there's an argument to made that you could have.
- close04 6y ago
  Indeed, as the old saying goes, a dollar today is worth more than a dollar tomorrow [0]. [0] https://www.apwip.com/a-dollar-today-is-worth-more-than-a-dollar-tomorrow-the-financial-aspect-of-the-time-value-of-money/ https://www.apwip.com/a-dollar-today-is-worth-more-than-a-do...

rb808 6y ago

I think this is just normal for big financial institutions. The small ones just break the rules or haven't been audited yet. The regulation is very suffocating.

thelittleone 6y ago
They've had their case review team on leave for 3 months. Paypal knows that some percentage of all cases under review are legit. Yet they chose to close the department. My friend is foetunate to he some savings but what if he didn't? And what about others? What about opportunity cost of missed investments and interest? They shut the fucking door knowing this.

the_svd_doctor 6y ago

Why would anyone have 25k in a Paypal account ? Genuinely curious. I never understood friends who keep 500-1000$ in their Venmo account. I empty it to my checking as soon as I have money in it.

snark42 6y ago
I've experienced this with $5k buy-in poker games settled via Venmo... I'm sure there's other good reasons.
thelittleone 6y ago
Payouts for a high end airbnb property. They fairly wanted additional proof of incorporatiin which was duly provided.... Many months ago. It seems almost like insurance companies. Deny first , make claimant jump through hoop after hoop hope they give up. What happens to the money then? This is very interesting because if they can profit from this we all the more disturbing.
xenospn 6y ago
I set up an auto-sweep in PayPal to deposit my entire balance to the business bank account every day. I don't trust them.
- thelittleone 6y ago
  Me neither. I find myself struggling to trust any large company. Older and wiser or just jaded I don't know which. These organisations entrench themselves in our lives that even when we dislike then intensely we sometimes don't have easy alternatives. Size seems to corrupt. Any examples if shining, upstanding, beneficent megacorps?
  - xenospn 6y ago
    Not sure about megacorp status, but Stripe never gave me any problems and always works.
    - 6y ago

baybal2 6y ago

Are there still people now who doubt that it's an official policy at paypal to make money on freezing people's accounts on every pretext? My first experience litigating with paypal actually dates to years right after my secondary, when I was an exchange student in Singapore. I had a paypal registered on my Russian debit card, and used it for trading on ebay. And yes, one nice day I learned that they want me to prove them that I am not Bennie Laden, with each successive document submission being less, and less reasonable, like demanding a notarised bank statement with wording that no sane Russian bank would issue in its right mind. So, I read the contract, and I saw "agree to dispute resolution under law of Republic of Singapore," which was a rather weird thing to see on a commercial contract from Paypal Russia LLC. And so, I got the name of the case officer at Paypal, and had a writ of summon delivered to him in person, myself in a few days. There was no way to describe terror on his face. I remember an exchange: - "Are you that person lawyer?" - "No, I am that guy" They settled on the first hearing. Only few years later, it came to me that they could have buried me with legal fees, even with court fees alone if they've chosen to continue.

ncmncm 6y ago
Personal writ of summons FTW! It bugs me that people don't name bad cops personally in lawsuits. Sure, sue the city for employing them even after all they have done over the years, but sue them personally for injury / suffering.
- toomuchtodo 6y ago
  https://en.wikipedia.org/wiki/Qualified_immunity https://en.wikipedia.org/wiki/Qualified_immunity (Wikipedia: qualified immunity)
thelittleone 6y ago
This is awesome. Do you have a template for the document? Any other tips like how did you find the name of the appropriate legal contact at PayPal?
- baybal2 6y ago

egypturnash 6y ago

Who do you recommend using instead? More precisely: who do you recommend using that has an interface designed for a non-technical person to be able to send and receive money without much more hassle than setting up an account, verifying their identity, and connecting a bank account or three?

efreak 6y ago
My understanding is that most banks in the US support Zelle. This gets you your money faster. The biggest issue I personally know of is that every bank has it's own name for it.

_bxg1 6y ago

Worth noting that Venmo is owned by PayPal, and from what I've heard its tech is trash (on top of probably the same bureaucratic issues). People I've known at PayPal have said they would never ever put their financial info into Venmo's systems.